Building materials producers have been knocked sideways by a hostile business climate.
Vinacomin reported 10.2 million tonne coal inventory as of July 31. Assuming one tonne of coal fetches VND1.4-1.5 million ($66-$71), this unsold stock costs approximately VND15 trillion ($714 million).
Vinacomin reaped VND500 billion ($23.8 million) profits in the first six months of 2012, a big retreat compared to its more than VND2.2 trillion ($104.7 million) profits in 2011′s same period.
Vicem Ha Tien 1 Cement Joint Stock Company (HT1) currently has a VND1.105 trillion ($52.6 million) inventory, down VND160 billion ($7.6 million) compared to the first quarter as a result of its strenuous efforts to boost sales.
Bim Son Cement’s current inventory costs VND552 billion ($26.2 million). Small firms are also burdened with rising inventory. For instance, a tunnel brick shareholding company in central Thua Thien-Hue province reports unsold stock worth more than VND15 billion ($714,000) of this VND10 billion ($476,000) suffers high interest rates.
This big idle capital amount made the firm incur serious losses. It had to retrench production to ease consumption pressures, said the firm’s director Nguyen Van Thien.
As with HT1, of its current VND11.105 trillion ($528 million) outstanding loans short-term loans account for VND4.240 trillion ($202 million). This triggers concerns about the firm’s ability to pay up debts upon maturity since the company’s 2011 revenue was VND5.3 trillion ($250 million). HT1 did not generate profits in four consecutive quarters since financial expenses have eaten up its profits.
HT1 is not alone. Fifteen listed cement and cement packaging firms report total asset value VND32 trillion ($1.5 billion) but their outstanding loans have amounted to VND25.5 trillion ($1.2 billion), tantamount to 79 per cent debt over asset rate.
Of these firms, Bim Son Cement’s short-term debts reach VND1.496 trillion ($71.2 million) against VND1.370 trillion ($65.2 million) short-term asset. Its profits in the first six months shed 12 per cent on-year and equal to 40 per cent of the year’s plan standing at VND12.2 billion ($580,000).
Three firms counted losses in the first half including Sai Son Cement, Tien Son Ha Tay and Song Da Yaly Cement joint stock companies.