Petrolimex ‘suddenly’ makes profit prior to IPO

In its latest financial report, the Vietnam National Petroleum Corporation, or Petrolimex, posted a whopping profit of VND913 billion ($46.555 million) in 2008, taking the public by surprise as it was also in 2008 that the giant state firm reported a loss of over VND10 billion.
The sudden profits make one curious as the state-owned corporation is set for an IPO (Initial Public Offering) in the next 10 days. In the past, its loss-making track records helped strengthen its plea for state subsidies and price hikes.
Now, Petrolimex’s chairman cum CEO Bui Ngoc Bao told Tuoi Tre that it switched from losses to profits due to different calculations.

In 2008, the global fuel prices hit record high, resulting in losses for all domestic petrol wholesalers, he said.

The government then set aside VND1.4 trillion to make up for the losses borne by petrol companies which were to receive VND1,000 on every gasoline liter sold.

“[In this new report] we do not count the losses that have been made up by the government [via subsidy policy], hence profits in the new financial report,” Bao explained.

He also admitted that Petrolimex incurred losses in the first five months of this year, and earned profits between June and mid July.

Petrolimex has foreseen losses in the upcoming months until September but the government would cover the losses of VND1.2 trillion in the first five months of this year since Petrolimex has joined in the fuel price stabilisation program, he said.

In an introduction about Petrolimex’s IPO in Ho Chi Minh City on July 14, Bao said the firm expected its pre-tax profit to be VND648.5 billion in the fourth quarter this year and VND2.68 trillion in 2012.

Bao said this prediction was made in line with the Decree No.84, which stipulates that the petrol market would be managed under market principles as asserted by the government and the petrol wholesalers could dictate retail prices.

“We base on the sales, annual growth rate and the required profit of VND300 per liter to forecast that profit,” he said.

As scheduled, Petrolimex will launch its IPO on July 28 at the Hanoi Stock Exchange, a move that marks the first step of its equitisation scheme and restructuring process as approved by the Prime Minister in early June.

Petrolimex plans to auction more than 27.4 million shares to the public with an initial price of VND15,000 per share.

Petrolimex is Vietnam’s largest fuel distributor, which accounts for 55 per cent of the country’s fuel distribution network with 42 affiliates, warehouses, over 2,100 retail fuel outlets and over 4,000 agents across the country. – VIR

Tags: Petrolimex