Enterprises under pressure to complete 2016 annual targets

20-Dec-2016 Intellasia | Dau Tu Chung Khoan | 6:00 AM Print This Post

The business and production activities of enterprises are often more exciting in the end of the year compared to the rest of the year. The fourth quarter of the year is often the stressful time for enterprises to make every effort to complete the annual business targets. However, not many enterprises can reach the goals and the prosperity of the last quarter alone many not be sufficient for them to complete the targets.

Representative of PetroVietnam general Services Joint Stock Corporation (PET) said that the firm is gathering reports from its member units and thus the expected results have not been finalised. However, year 2016 is a very tough year for service sector, and PTE is striving to complete the plan but the results are forecasted to be lower than 2015. Since the end of the year is the strong development period of the segment of mobile phone and computer distribution, the main business of PET, the firm expected that this segment will help it record higher profit in the fourth quarter of 2016 compared to the average profit of the first three quarters of the year.

PET is planning to expand the market to customers from other sectors such as banking, foreign direct invested companies, and large-scaled production companies; and participate in bidding for service provision in neighbouring international markets such as Malaysia and the Philippines, etc. PET has completed handing over the housing service area for Nghi Son Oil industrial zone. This project will being a stable and sustainable source of revenue for PET in the near future.

Nguyen Duc Dat, Chief Accountant of Petroleum Equipment Assembly Metal Structure (PXS) said that until now, the company has worked out the estimated business results in 2016 with estimated revenue of 1.550 trillion dong and pre-tax profit of 110 billion dong. Thus, compared to the annual targets of 2.240 trillion dong of revenue, output value of 2.650 trillion dong, and after-tax profit of 115 billion dong, PXS’s has not been completed.

However, Dat said that the ongoing projects of PXS are on schedule. In 2016, the company has focused on some projects such as the residential housing area of LQ Module and LQ Platform of Su Tu Trang Gas Field (White Lion), Topside RC9 project, 3P project, Thai Binh 2 Thermal Power Plant, and Nghi Son Petrochemistry and Refinery complex. In particular, LQ Module of the White Lion Project will be officially handed over in 2016 and Thai Binh 2 Thermal Power Plant and Nghi Son Petrochemistry and Refinery complex will be handed over in 2017. These projects are expected to bring better revenue for PXS.

Survey of Dau Tu Chung Khoan newspaper showed that not many enterprises are ready to announce their estimated profits in 2016. With a very limit time left in 2016, and under the pressure to complete the plans, many enterprises have chosen to reduce the profit targets. This is the solution to lower the pressure when firms have to explain the business results at the annual shareholders meetings in the next year. However, the sudden reduction of profit target by up to 90 percent of Petrolimex Petrochemical Corporation (PLC) was a shock to shareholders.

PLC has adjusted the business and production plan in 2016 by reducing revenue target from nearly 2.480 trillion dong to 1.481 trillion dong (down by 40 percent), lowering after-tax profit target from 120 billion dong to nearly 7.25 billion dong (down by 94 percent), and cutting the sales volume in 2016 from 230,000 tonnes to 204,000 tonnes.

According to PLC, the consolidated business and production plan of PLC will decline from 5.982 trillion dong to 4.983 trillion dong revenue, down by 17 percent; and from 387 billion dong to 246 billion dong pre-tax profit, down by 36 percent. In particular, the profit target of the asphalt segment – one of the two main businesses of PLC – was cut by more than 141 billion dong.

In fact, many investors are interested to know whether firms complete or exceed the plans and forget to compared the plans before and after being adjusted, as well as consider whether there is development in business results compared to the same period or not.

For example, Hanoi general Investment Joint Stock Company (SHN) has announced to achieve 120 billion dong of after-tax profit in 2016, 26.31 percent exceeding the plan. However, not long ago, SHN lowered the revenue target by 22.43 percent (from 709 billion dong to 550 billion dong) and after-tax target by 55.19 percent (from 212 billion dong to 95 billion dong). In this case, although SHN has exceeded the adjusted plan, shareholders should be more concerned about the initial profit plan.

Vietnam Investment Securities Company (IVS) is the first securities firm to announce the adjustment of business plan in 2016. Accordingly, the total revenue objective of IVS was cut from more than 67 billion dong to 27.25 billion dong. Notably, the firm’s after-tax profit target was sharply reduced from 19.53 billion dong to 2.16 billion dong. According to IVS, this adjustment was due to the firm’s unfavourable business results.

Enterprises have been much affected by the unpredictable external factors, including the two major factors which are exchange rate and interest rate. The continuous fluctuations of foreign currencies have caused many enterprises to encounter difficulties.

For firms which borrow in foreign currency, especially in US dollars, the volatility of the greenback in the fourth quarter is unpleasant, particularly when the US Federal Reserve (Fed) has decided to raise the basic interest rates by 0.25 percent and forecasted that there would be three interest rate increases in 2017.

With a foreign currency loan of nearly 70 million US dollars, leader of a listed company said that in November 2016 alone, this firm had to account 30 billion dong for exchange rate difference provisioning.

With a fairly high number of listed companies having loans in US dollars, the US dollar/ dong exchange rate has gradually been eroding their profits in 2016.

In addition, the enterprises of which imported inputs account for large proportion will be at disadvantage when the US dollar appreciates, especially those have signed purchase contracts and goods are on delivery.

Meanwhile, the depreciation of Japanese yen cannot help Pha Lai Thermal Power Joint Stock Company (PPC) to avoid recording loss in 2016. As shared by PPC’s representative in the previous time, the company can hardly complete the annual plan due to the huge provision for the Japanese yen/dong exchange rate difference since the beginning of the year.

In the context when the global financial market is fluctuating unpredictably as in the current time, many firms said that they will use the exchange rate and interest rate movements as well as the increase or decrease of raw materials as a basis for building the business plan in 2017.

 


Category: Business

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