While many companies announced to adjust up dividend payment ratio in 2012, others are considering cutting down dividend payout due to unsatisfactory business performance.
In the first six months of this year, Pan Pacific Joint Stock Co (coded PAN) gained 21 billion dong pre tax profit, or 105 percent of the year’s plan. Therefore, in comparison with the initial dividend plan of 10%, the company will raise 2012 dividend payment. Particularly, PAN will advance 10 percent dividend as planned and the additional dividend will be decided in the next annual general meeting (AGM) when the company has audited results and balance from the real incomes.
Tran Huy Loan, deputy director of Hai Duong Beer Joint Stock Co (coded HAD) said that in 2012, HAD estimates to exceed at least 30 percent of the year’s business plan. Therefore, the company’s dividend payout would be raised to 25 percent from the previous plan of 20%.
Binh Duong Trading and Development Joint Stock Co (coded TDC) not only adjusted the after tax profit plan to 214 billion dong, up 3.7 percent from the initial plan, but also raised dividend payment from 15 percent to 20 percent in 2012. Vinaconex 9 Joint Stock Co (coded VC9) also raised its dividend payment in 2012 from 14 percent to 16%.
Leader of a securities company said that the increase in the dividend payment plan of companies is a good sign, showing that companies are doing business efficiently. However, the dividend adjustment is just temporary while the importance is whether the financial “health” of companies is sustainable or not as well as how is the long term development orientation of companies.
Together with the voluntary dividend increase, some enterprises had to adjust up dividend under the pressure of shareholders. However, shareholders often propose companies to increase dividend when ending the fiscal year.
Dividend is a relatively important factor for investors to consider investments in enterprise. However, many companies still remain deeply evasive on this issue. In 2012, Vietnam Germany Steel Pipe JSC (coded VGS) targets to reach 1.9 trillion dong revenue and profit before tax of 14 billion dong, but the dividend is still open. According to the leader of VGS, till August 2012, though the company does not have specific decision, it is more likely that VGS will not pay dividends in 2012 due to unsatisfactory business situation (in the first six months this year, VGS’s profit was 3.41 billion dong).
Leader of a company in the Song Da family said that due to unfavourable business conditions in 2012, the company plans to reduce 2012 dividend from 10 percent to 5%.
In fact, most enterprises, which have a dividend reduction plan, are strapped for cash before the time of paying dividend. Some others although gaining profit do not have cash for dividend payout.
Companies in the “Viglacera” family, which in previous years often paid huge dividends, popularly at 30-60%, intend to adjust down, even have no dividend payment plan in 2012 due to bad business results. The decline in profit in 2012 of these firms was attributable to high original costs of goods for sale and high inventory as well as higher production costs than the same period last year.
A firm under the “Viglacera” family said in the first half of this year, the company gained only 26.2 billion dong revenue and 480 million dong profit, equalling to only 7 percent of the same period last year. Therefore, the company plans to reduce dividend in 2012.