Major businesses undergo slow recovery after Covid-19

Despite the positive business results witnessed in the early months of the year, many listed companies have been cautious with their pre-tax profit targets.

People have a toast at a party. Sabeco is among giants hit hard by the pandemic - PHOTO: THANH HOA

Foreseeing profit reductions

The Saigon Beer-Alcohol-Beverage Corporation (Sabeco) recently released documents relating to the annual 2020 shareholders’ meeting, targeting a lower after-tax revenue and a profit of VND23,800 billion and VND3,252 billion, respectively (down 37% and 39%).

Since it was bought by a Thai billionaire, Sabeco has undergone many changes in terms of cost reductions, resulting in a profit increase of 22% to VND5,370 billion. However, the alcoholic drinks market was greatly affected by Decree 100 on drunk driving and later by the Covid-19 pandemic.

In addition, stricter regulations on the marketing and advertising of beer only added to the company's woes. These revenue and profit targets of Sabeco are the lowest to be recorded in the past five years.

Sabeco is not the only one hit hard by the pandemic. Mobile World Investment Corporation has also lowered its profit target by 10% despite a revenue increase of 8%.

Mobile World’s growth in revenue can most likely be attributed to the firm's plans to open Bach Hoa Xanh grocery stores in 24 provinces toward the end of 2021.

Given the positive business results in quarter one, Mobile World chairman Nguyen Duc Tai said the negative impacts of Covid-19 on his firm will be limited.

Jewelry firm PNJ has also cut its revenue and after-tax targets by 15% and 30%, respectively. Such reductions are based on the results of the last eight months of the fiscal year dropping by 20% and 20% year-on-year, as estimated by the SSI Securities Corporation. 

PNJ believes its retail revenue will drop from July but the firm is still targeting 31 new stores this year. The new stores will be opened in parallel with the shutting down of several other stores. The company's investment budget for this year has fallen by 33% to VND150 billion, mainly used for opening the new stores.

Precautionary steps

Amid the fluctuating oil prices during the Covid-19 period, many businesses adopted a more cautious approach. At PV Gas, its revenue and after-tax targets have been cut by 13% and 45% against 2019 to VND66,163 billion and VND6,636 billion, respectively.

According to SSI, PV Gas achieved 46% and 45% of its revenue and pre-tax targets, respectively, equivalent to VND27,600 billion and VND4,500 billion. SSI estimated that the revenue and after-tax results would drop by 13% and 33% this year, with material prices and output volumes remaining unchanged compared to the same period last year.

Vingroup is also facing many challenges, and while the revenue is expected to pick up 11.5%, the after-tax profit is set to fall by 35.2%.

According to SSI, Vingroup’s cautious profit plan can be attributed to the declining profits of retail space rentals and losses incurred by hotel services due to the impact of the Covid-19 crisis. Besides, the business areas the firm is investing in are expensive including VinFast and industrial production.

A report of Fiingroup showed that as of May 27, some 426 of 1,644 non-financial firms put forward their business plans for this year, accounting for 71% of total capitalization on the three trading bourses. Revenue growth is expected to slow down to 2.5%, whereas pre-tax profits could drop considerably by 17.8%.

This could be the lowest revenue growth posted in the past five years and the first time such low pre-tax profits have been recorded in the past nine years, the report stated.SGT

Dung Nguyen

 
Breaking down barriers to recovery

Breaking down barriers to recovery

ASEAN member states are aiming to enhance supply chain resilience, improving connectivity and the free flow of goods by minimising trade restrictiveness, particularly non-tariff measures.

Signs of economic growth recovery

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One month after the easing of social distancing measures, many economic sectors have prospered, while some others have shortened their steps of decline. 

 
 

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