SOE performance during the Covid-19 pandemic

Many state-owned enterprises (SOES) experienced a turbulent year in 2020. In the first half of 2021, many businesses escaped the crisis and gained impressive results.

However, there are still corporations strongly affected by the epidemic, such as Vietnam Airlines and Vietnam Railways Corporation.

PVN overcomes difficulties, banking sector earns big profits

In the first half of the year, Vietcombank's pre-tax profit reached VND 14,560 billion, up 36% over the same period last year, ranking first for profit.

Contrary to the "gloomy" picture of many enterprises, state-owned enterprises have achieved many impressive business results compared to 2020, especially the Vietnam Oil and Gas Group (PetroVietnam) and the banking sector.

According to a report of the Party Committee of the Central Business Bloc (including over 30 state-owned corporations), in the first half of 2021, total revenue of corporations in this group was estimated at VND717.48 trillion, up 4.43%; pre-tax profit at VND76.45 trillion, up 77.7%; and tax payment at VND114.53 trillion, up 3.21% year on year.

Corporations in the industrial production and finance and banking sectors, and Petrovietnam, had impressive business results. Textile and garment profits increased by 96%, and steel increased by 216%. Banks also earned high growth rates such as BIDV at 80%, Vietinbank 75%, Agribank 40%, and Vietcombank 36%.

In the first half of the year, Vietcombank's pre-tax profit reached VND 14,560 billion, up 36% over the same period last year, ranking first for profit.

Le Manh Hung, PetroVietnam General Director, said that the Covid-19 pandemic has narrowed the market for energy products and products of the oil and gas industry and affected the continuous operation of oil and gas projects at home and abroad.

In 2020, the phrase "the most difficult year in the history of the oil and gas industry" often appeared in PetroVietnam’s reports. There was a time when the world oil price fell to negative levels. However, in the first six months of the year, PetroVietnam "revived" strongly. The group's total revenue reached VND 299.3 trillion, exceeding 20% of the 6-month plan and 22% over the same period in 2020.

After a difficult year, Vietnam Textile and Garment Group (Vinatex) also broke a record in its 25 years of history, with pre-tax profit estimated at VND557.8 billion, up 95.6% year on year, reaching 79.7% of the yearly plan.

Despite facing many difficulties from the Covid-19 pandemic, state-owned enterprises still tried to come up with a plan to survive and stand firm. The report of the Ministry of Finance shows that revenue from the state-owned enterprise sector in the first six months reached 52.9% of the estimate, up 18.2%.

Transport sector at a loss

By June 30, 2021, the combined accumulated loss of Vietnam Airlines was more than VND19.8 trillion.

At a recent conference, Dang Ngoc Hoa, Chairman of the Board of Directors of Vietnam Airlines said that by June 30, 2021, the combined accumulated loss of Vietnam Airlines was more than VND19.8 trillion. In the most optimistic scenario, by the end of 2023-2024, international aviation will recover to the level of 2019. Before the Covid-19 epidemic, Vietnam Airlines operated about 550 flights a day.

The overdue debt of the airlines has reached VND6.24 trillion. The national flag air carrier has fallen into an extremely difficult situation and is on the verge of bankruptcy, according to the Ministry of Planning and Investment.

Explaining to its shareholders about business performance in 2021, Vietnam Airlines said the impact of the Covid-19 outbreak had caused total revenue and income from other sources of the holding company to fall by 65.3 percent compared with the same period last year (VND9.558 trillion). The income from services dropped sharply by 63.7 percent.

Vietnam Airlines’ domestic revenue dropped by 25.8 percent and international revenue by 97 percent, while revenue from chartered flights fell by 83.5 percent. As the drop in revenue was higher than the fall in operation costs, the post-tax profit fell by VND2.793 trillion.

Having no passengers, hundreds of aircraft have been idle. According to Planespotters, 127 out of 218 aircraft of four airlines in Vietnam have been suspended.

The Vietnam Railways Corporation (VNR) is in a similar situation. Dang Sy Manh, VNR General Director, said that since the Covid-19 pandemic broke out in early 2020, the railway industry has been experiencing an unprecedented difficult period. It is estimated that in the two years affected by the Covid-19 epidemic, VNR will lose more than VND2,200 billion.

Recently, VNR asked for the Committee for Management of State Capital at Enterprises’ VND 800 billion loan with preferential interest rates to maintain operations. According to VNR, this is the minimum to maintain operation at the lowest costs.

Luong Bang