Vietnamese firms lower 2021 targets despite brighter economic outlook

Hanoi (VNS/VNA) - Even though economic growth is expected to strongly recover this year as the pandemic has been contained, companies in many sectors have still lowered their profit targets. 

According to VNDirect Securities Corporation, total profits of companies listed on three exchanges, including the Ho Chi Minh Stock Exchange, Hanoi Stock Exchange and UPCOM, rose 15.6 percent year-on-year in the fourth quarter of 2020.

With outstanding economic recovery, listed companies’ profits are estimated to grow 23 percent this year, said VNDirect.

However, despite a bullish outlook, many companies submitted lower business plans compared to last year to shareholders. 

Pha Lai Thermal Power JSC (PPC) set a target of nearly 5.7 trillion VND in total revenue, down 31 percent over last year, resulting in a drop of 66 percent in profit before tax to 415 billion VND.

Although the power sector is expected to grow as it has recovered strongly, PPC's profit target is the lowest since 2014.

During 2017 - 2020, PPC had always set a profit plan of over 700 billion VND per year and then surpassed the plan. Last year, the company exceeded its profit target by 30 percent.

The company is likely to face many difficulties and challenges this year.

“Power output and contracted power output are very low this year, which will affect our operation process, as well as business results,” said PPC.

The volatility of coal prices also directly weighs on the company’s production costs, affecting its competitiveness in the electricity market.

Petrovietnam Fertilizer & Chemicals Corporation (DPM) and Petro Viet Nam Ca Mau Fertilizer JSC (DCM) also lowered their business results on higher raw material costs. Accordingly, DCM set this year’s profit after tax at 197 billion VND, down 70 percent year-on-year, while DPM estimated its profit after tax to decline 48 percent to 364 billion VND. 

DCM said that it has to face a series of difficulties, especially as gas prices tended to rebound, the COVID-19 outbreak and new strains spreading to many countries, and the drought and saline intrusion in the dry season in the southwest continues unpredictably, affecting demand for fertiliser products.

Severe competition between local and foreign fertiliser producers also puts pressure on the market. 

Enterprises in the natural rubber industry also hesitated in making business plans such as Phuoc Hoa Rubber JSC (PHR), Vietnam Rubber Group JSC (GVR) and Tay Ninh Rubber JSC (TNR).

PHR expected 2021 will be a tough year for the industry, especially in collecting latex. 

After struggling last year, the business prospects of enterprises in the fisheries sector are poor.

Travel Investment And Seafood Development Corporation (DAT) estimated this year’s revenue at 2.1 trillion VND, down 2.8 percent against last year, with profit after tax decreasing 22.9 percent to 40 billion VND.  

According to DAT, demands in export markets due to COVID-19, higher freight costs and higher raw materials costs are reasons for its pessimism.

Similarly, after a plunge in 2020, Vinh Hoan JSC (VHC) continues to set a lower profit target. The enterprise expected a drop of 22.2 percent in revenue to 8.5 trillion VND, with profit after tax of 700 billion VND, down by 2.6 percent.

Some companies even set negative profit targets.

36 Corporation (G36) surprised shareholders and investors with a revenue plan of over 19 trillion VND, down 17.03 percent year-on-year, and a loss of 66 billion VND.

In 2020, despite being heavily affected by the COVID-19 pandemic, G36 still recorded impressive business results as its revenue reached over 2.3 trillion VND (up 28.7 percent), resulting in a growth of 83.4 percent in profit after tax profit to 58 billion VND. Since registering to trade on UPCOM in 2016, G36 has always been profitable./.