Company earning thousands of billions from selling asphalt wants to reduce profit target

Revenue of thousands of billions, profit of tens of billions

Petrolimex Petrochemical specializes in trading, importing and exporting lubricants, asphalt and chemicals.

The output market of all three industries is mainly in the domestic market, with most customers being industrial production, trade, transportation and traffic infrastructure enterprises.

Therefore, fluctuations in the domestic economy affect the company's business operations.

Petrolimex Petrochemical's Board of Directors believes that the force majeure factors are beyond the ability to forecast when developing the plan, so adjustment is necessary.

The company has proposed adjusting the total pre-tax profit plan to only about 46% of the plan, from 140 billion VND to 65 billion VND.

At the same time, the minimum dividend rate is 5%, half of the plan approved by the general meeting of shareholders.

The company's management board said that in the first 9 months of this year, the total imported asphalt output (the company's main product) brought to the domestic market was only 55% compared to the whole year of 2023.

As of November 2024, disbursement of public investment capital nationwide is estimated to reach more than VND 410,900 billion, nearly 55% of the plan.

At the same time, the market has strong competition from imported goods from the UAE to Vietnam, both in terms of output and price, lower than other sources (prices are 9-14% lower than Singapore).

In fact, not only asphalt products, but also two other products of Petrolimex Petrochemicals are facing fierce competition from many rivals.

In the lubricant industry, there are big brands such as BP Castrol, Total, Caltex, Shell, etc., or in asphalt there are Adco, ICT, Tratimex, etc., and in the chemical sector, there is competition with Sam Sung, Top Solvent, Dealim, etc.

High competition while consumption output decreased caused the company's business results to decline sharply.

Earned over 2,000 billion from asphalt in 9 months

Petrolimex Petrochemical recorded net revenue in the third quarter of this year reaching more than 1,400 billion VND and after-tax profit of less than 6.6 billion VND, while in the same period last year it reached more than 16.5 billion VND.

Currently, Vietnam National Petroleum Group (Petrolimex) owns 79.07% of Petrolimex Petrochemical's capital.

Petromiex's subsidiaries are partners that account for the majority of the company's receivables, at more than VND 87 billion (as of the end of September 2024).

In the first 9 months of the year, this company recorded net revenue of more than 4,800 billion VND, but net profit was only nearly 23 billion VND.

Net profit margin for the past 9 months was 0.48%; meaning for every 100 VND of revenue, the company only earned 0.48 VND of profit after tax.

Asphalt contributed nearly 43% of Petrolimex Petrochemical's total sales revenue in the past 9 months, reaching more than VND2,000 billion (equal to 71% compared to the same period last year).

As of the end of September 2024, the company had short-term loans and financial lease debts of more than VND 1,800 billion, accounting for nearly 64% of short-term debt.

Of which, the largest amount by the end of the period at Vietnam Joint Stock Commercial Bank for Industry and Trade ( Vietinbank ) was more than 420 billion VND.