State giants report business results and claim difficulties

High interest rates, difficult capital accession (especially US dollar) are common hardships that state groups and corporations concerned in a meeting with Prime Minister and the government’s standing board on Feb 15.

2010 was seen as a successful year when Vietnam Rubber Group reached the earnings of $1.1 billion from exports. But they said they could have posted a better performance if they did not face difficulties in capital source.

With a common lending rate of 18%, not many enterprises can report good performance because added value of products must be over 20% if enterprises want to make profits, an official from the group said. So, last year rubber companies mainly had to operate with their ownership capital and tried to make profits thanks to rising prices on the international market.

However, in 2011, the rubber group expects to invest about 12 trillion dong in production, 7 trillion dong of which will be loans. With the current lending rate, the group’s affiliates confirmed they would not stand it.

Interest rate difficulties also were shared by Le Van Chung, chairman of Vietnam Cement Group. In his opinion, despite the lending rate was announced at 18%, a lot of firms now are suffering the level of 20% to take bank loans. Regulators should have suitable monetary policies in 2011 to help enterprises develop stably.

With Vietnam Shipbuilding Industry Group (Vinashin), difficulties in capital at this time are higher. Most banks expressed caution on Vinashin’s member companies.

Nguyen Ngoc Su, chairman of Vinashin was quoted as saying that they cannot operate profitably in 2011 whereas most banks will only lend Vinashin companies as long as Vinashin reports profits. “Thus, the group will not have capital this year”, he stressed.

Analyzing business and production reports of 21 groups and 91 corporations showed that total ownership capital of state giants gained 540.701 trillion dong in 2010, up 11.75% year on year. In which, some groups posted very strong growth rate ranging between 44% and 53%, such as Vinacomin, Viettel.

Basically, state groups and corporations all had the debt-to-equity ratio within allowable limit. Total revenues of the giants last year surpassed 22% of the annual target and surged 36% against 2009.

Up to 20 of 21 groups and corporations operated well and made profits, amounting to 70.778 trillion dong in total pretax profit. Their budgetary contribution was estimated at 173.549 trillion dong, soaring 31% compared to 2009.

Tags: Vietnam companies, Vietnam enterprises, Vietnam SOEs