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Tough times for transport companies in 2014

Released at: 17:47, 15/01/2015

Tough times for transport companies in 2014

Official financial reports show transport industry in something of a flux.

by Son Ho

The Shipbuilding Industry Corporation (SBIC), Vietnam National Shipping Lines (Vinalines), Airports Corporation of Vietnam (ACV), Vietnam Airlines (VNA), and Vietnam National Railways (VNR) - five of Vietnam's biggest transport companies - had a difficult time of it in 2014 according to reports they submitted to the Ministry of Transport.

SBIC and Vinalines both recorded major losses 2014, though not to the same extent as in 2013.

SBIC's total revenue in 2014 was VND7.64 trillion ($356.06 million), 30 per cent higher than the annual plan. But its losses still came in at more than VND2.18 trillion ($102.13 million) at the end fiscal year 2014. In 2013 it lost VND6.4 trillion (299.84 million) .

Sales and production value were two indicators where SBIC achieved its target. Production value reached VND5.7 trillion ($267.05 million), while sales revenue was more than $200 million, with 76 ships being handed over. Of these, 33 ships were exported for revenue of nearly $34 million, while 43 ships were sold domestically, mostly for modernizing fishery inspection vessels and steel-armored fishing vessels.

"The corporation mostly built vessels for the Damen Shipyards Group from the Netherlands in 2014, as well as Navy and fishing vessels," said Mr. Vu Anh Tuan, General Director of SBIC.

Vinalines, meanwhile, recorded an estimated loss of VND1.392 trillion ($65.22 million), 76 per cent lower than in 2013 (which was $267.05 million - its highest ever). Its 2014 business results fell short of the annual plan, with total revenue reaching only VND18.086 trillion ($847.33), or 77 per cent of 2013's revenue figure. The low result was put down to falling imports for re-export services.

Some good news for Vinalines is that exploiting activities of vessels in most of its member companies began to see positive cash flows. And though its seaports recorded revenue equal to 2013, losses fell by 35 per cent.

VNA, VNR and ACV had a profitable year, but their figures perhaps reflect a number of issues they had to face.

ACV's pretax profit was VND1.256 trillion ($58.84 million), 5 per cent higher than the annual plan. However, this was the third consecutive year profits have fallen, in this case by 7.7 per cent compared to 2013, but the corporation still recorded the highest profit among the four largest companies in Vietnam's transport sector. Total revenue in 2014 stood at VND8.571 trillion ($401.55 million), 6 per cent higher than the annual plan and a 0.86 per cent increase against 2013.

VNA's revenue in 2014 reached VND71.79 trillion ($3.36 billion), a 2 per cent increase compared to 2013. State budget contributions were VND2.936 trillion ($137.55 million) and pretax profit VND647 billion ($30.31 million). Capacity was approximately 80 per cent, marking a 0.5 per cent increase against 2013, despite declining in some markets.

Though the figures for 2014 were positive, VNA's Board of Directors have set modest targets for 2015, with total revenue to be VND55 trillion ($2.58 billion) and profit VND180 billion ($8.43 billion).

At VNR, total production value was VND9.230 trillion ($432.43 million), revenue VND9.333 trillion ($437.25 million), and pre-tax profit VND180 billion ($8.43 million). Though not officially announced, a leader of VNR said that its results mostly came from its parent company's activities.

Worth noting is that revenue from transporting passenger and freight has reached a peak because further improvements are difficult to come by. At the same time, VNR has to compete fiercely with other modes of transport, such as air and waterway.

"Except for ACV, the business forecasts of these companies are not completely accurate, especially VNA and Vinalines," one expert said. "They will greatly depend on changes in the oil price, which are very difficult to forecast."

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