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Incurring big losses, shipping firms have to sell ships to live   2011-08-25 - SGTT

Fuel price, bank loan interest rate and dollar price increases all have dealt a strong blow on shipping firms. Very few shipping firms have reported profits, while many of them have sold ships to shift to other kind of undertaking.

 

Maritime transport has been handling 80 percent of the total Vietnamese imports and exports. It is estimated that 8-11 billion dollars are spent on logistics works in Vietnam every year, of which shipping accounts for 60 percent. However, the domestic fleet just tohold 20 percent of the market share, while the bigger piece of the cake – 80 percent – is being handled by foreign firms.



Shipping firms heaped up with big difficulties


Most shipping firms have reported losses, while many of them have been on the verge of bankruptcy. After 15 years of operation, Vinalines, the big guy in the field, has reported the loss of 660 billion dong, even though the total revenue of the corporation in the first six months of the year reached 10,405 billion dong, fulfilling 50 percent of the plan.



The finance report of the Vietnam Transport and Chartering Corporation VFR shows that it got the net turnover of 85.81 billion dong in the second quarter of the year, an increase of 25.88 percent over the same period of 2010. However, the gross profit from the main business was minus 28 billion dong.



VSG strives to reduce the loss to 31.5 billion dong in 2011 after it incurred the loss of 40.6 billion dong in 2010. Though VSG’s revenue in the second quarter reached 27.4 billion dong, an increase of seven billion dong over the same period of the last year, it still incurred the post-tax loss of 16.3 billion don. VSG has the chartered capital of 110.4 billion dong, but the stockholder equity has dropped to 44.2 billion dong.



As for VOS, the corporation got 778 billion dong in revenue in the second quarter of 2011, up by 12 percent over the same period of the last year, but its profit decreased dramatically by 98 percent to 848 billion dong.



MHC did not get turnover from maritime shipping, while it has shifted to another kind of undertaking after incurring the big loss of 62 billion dong in the first six months of 2010.



Analysts say most Vietnamese shipping firms have low chartered capital levels, while they have been living on shipping crude, bulk goods and exporting crew (the activities bring 70 percent of total revenue). Meanwhile, the accounts payable are relatively high, usually accounting for over 80 percent of chartered capital. Therefore, the business costs are always high, which explains why the post tax profits of shipping firms are always low.



The constant losses have made the shares of shipping firms drop dramatically. The shares are just selling at 2000-4000 dong per share. A lot of shareholders are offering to sell options to buy shares, but they remain unsalable.



What to do? Selling ships and moving to other fields


The noteworthy thing is that though shipping firms’ finance reports all show the losses from the main business field, most of the firms “escaped” from loss in the last minute thanks to the ship sale.



VOS, for example, liquidated the Vinh Long Ship and earned the profit of 21.3 billion dong, which allowed the corporation to earn the post tax profit of 850 billion dong in the second quarter of the year



Similarly, the main business field brought the loss of 28 billion dong to VFR in the second quarter of 2011, but the corporation got another profit item worth 160 billion dong, which has completely changed the business performance picture of the corporation. According to Saigon tiep thi, the profits of VFR have been got from selling ships.



MHC’s fleet has been liquidated to get money to cover debts, while MHC has shifted from maritime transport to real estate and finance investments. The corporation plans to obtain the profit of 10 billion dong. However, the 10 billion dong would come from the development of the Hai An port, where it holds 31 percent of the chartered capital and the development of Hai An building, not from the main business field.



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