State cement firm posts loss despite high revenue

The Vietnam Cement Industry Corporation (VICEM) posted a loss of VND7.8 billion (US$390,000) in the year to date, despite a revenue of VND20.5 trillion, the company said in a meeting yesterday.

High expenses is the main cause for this loss, VICEM’s CEO Nguyen Ngoc Anh said at the meeting chaired by Deputy Prime Minister Hoang Trung Hai to find solutions to ease the state-run corporation’s difficulties.

He said the lending interest rate of up to 21.5 percent plus the forex rate difference of VND540 billion had sent production costs to a skyrocketing high and thus reduced profits for VICEM and its subsidiaries.

He added input costs such as fuel also rose by 32 percent, while the respective figures for power and coal were 15.28 percent and 41 percent.

“The government policies to tighten credits and cut public spending and the frozen real estate market also forced the cement makers to constantly reduce prices to even lower than production costs to increase consumption,” he said.

An official from the Ministry of Finance said with the profit margin of only 9 percent, the cement sector was operating with poor effectiveness regardless of the increased sales and production.

“It is also difficult for VICEM to clear foreign debts as six out of its nine subsidiaries are suffering losses while the exchange rate difference is still big,” he said.

Deputy Minister of Construction Nguyen Tran Nam said high production costs, poor workforce productivity, non-diversified products and low competitiveness were amongst the main causes for VICEM’s losses.

He added that the company also had to suffer high transportation cost due to the undeveloped traffic infrastructure.

Deputy Minister Hai said VICEM had to expand its export market to boost consumption and reduce stockpile as a short-term solution to overcome crisis.

He also urged the company to develop plans to reduce the fuel and material consumption and increase workforce productivity.

“VICEM also has to restructure production and enhance technology,” he said.

Source Tuoitrenews

Tags: Vietnam cement industry, Vietnam cement sector