Construction firms report H1 losses

Local construction corporations are concerned about whether they will be able to overcome the current difficulties in the second half of the year

Many have reported revenue losses in the past six months, partly due to the global economic downturn.

In a Ministry of Construction online briefing session, general director of Song Da Construction Corporation Duong Khanh Toan said that in the first half of the year, before-tax profit was only VND560 billion (US$27 million), reaching 18 per cent of the target.

Toan said the main reason for low profits was that investors lacked the capital to pay for construction, thus debt exceeded the capabilities of the units.

In particular, the total value of construction on the Lai Chau hydropower plant reached VND1.3 trillion ($63.1 million), but advance payments from investors only amounted to VND264 billion ($12.8 million).

Building contractors have not yet received any payments for June or July, and Song Da Corp has had to find funding from alternate sources to pay workers’ salaries. A lack of capital scared investors, making them less likely to test construction, Toan added.

Toan said the ministry should have protocols to help investors pay for building contractors.

Moreover, high loan interest rates and depreciating equipment were seen as obstacles to business activities, Toan said.

“Housing and urban business usually brings high profits, but at present corporations face many difficulties due to the slow market and the tightening of fiscal policy,” Toan lamented.

Nguyen Dang Nam, general director of the House and Urban Development Corporation, said that real estate businesses had probably never struggled as much as they were now.

Le Van Chung, CEO of the Viet Nam Cement Industry Corporation, said enterprises producing construction materials were not exempt from these difficulties.

Chung said that prices of materials and fuel were on the rise, including coal (up 41 per cent), petrol (32-43 per cent), steel (nearly 30 per cent) and electricity (15.2 per cent), while output was quite slow.

Profits of manufacturers reached only 2-3 per cent and low interest rates were not enough to pay dividends to shareholders following the bank interest, Chung added.

Representatives of corporations suggested the Government review the monetary policy to help enterprises avoid stagnation. — VNS

Tags: Vietnam Construction, Vietnam construction sector