Enterprises cut forecasts due to gloomy outlook

Although business results in the fourth quarter of 2023 show signs of improvement, they are not as positive as expected. This is causing many enterprises to lower their revenue and profit targets for 2023 when there is less than one month left until the end of the year.

After witnessing poor performances in the first half of 2023, many businesses expected the situation to improve in the second half of the year.

However, data from SSI Research showed that in the third quarter, the total profit after tax of listed businesses declined by 5 per cent year-on-year after continuously recording a sharp double-digit decrease in the previous three quarters. 

In the first nine months of 2023, total profits of businesses dropped by 15.8 per cent from last year. 

Despite some improvements in the business situation in the fourth quarter, the performances of most companies were not as positive as expected in October and November. 

As a result, many businesses have to cut their business targets for 2023.

Lower profit targets in oil and gas industry

Most recently, Petrolimex Gas Corporation (PGC) on December 5 held an extraordinary General Meeting of Shareholders to approve the reduction of its profit before tax target from VND168 billion (US$6.9 million) to VND135 billion, equivalent to a decrease of nearly 20 per cent from the plan approved by the 2023 Annual General Meeting of Shareholders.

In the gas market, the reference price fluctuates strongly and continuously during the period, causing huge losses in inventory differences and making it difficult to ensure supplies for liquefied petroleum gas (LPG) companies, including PGC.

Strong competition from alternative fuel sources, as well as from businesses in the LPG production and distribution industry, also affects the growth of PGC's gas output. 

Similarly, Hai Phong Petrolimex Transportation & Services (PTS) recently had a resolution to collect shareholders' opinions to approve adjustments to its 2023 business plan.

Specifically, the company plans to reduce the total revenue target to nearly VND399 billion, a decrease of 16 per cent from the previous plan, while its profit before tax target is lowered by 95 per cent to VND500 million, the lowest level since 2013. The dividend level was also adjusted down from 8 per cent to 2 per cent.

According to PTS, the adjustments are based on the company's business results in the first nine months of the year and market forecasts for the last months of the year.

For the first nine months, its revenue reached only VND92 billion, down 15 per cent over last year, with gross profit margin narrowing to 8 per cent. During the period, it posted a loss of VND779 million.

The company also said the operation of the coastal fleet was not effective, as Nghi Son oil refinery stopped operations for maintenance for 55 days.

Previously, in mid-November, Petrolimex Petrochemical Corporation (PLC) passed a resolution to adjust the 2023 revenue target by 5.7 per cent compared to the previous plan to nearly VND8.4 trillion. Its profit before tax and after tax targets are also expected to decrease by 30 per cent compared to the original plan, to VND140 billion and VND112 billion, respectively.

Export enterprises struggle to meet targets

Many export businesses are facing declines in export orders, making them struggle to achieve business targets set for 2023.

At the end of November 2023, Vinatex announced a resolution to adjust its production and business plan for 2023. Accordingly, the leader of the textile and garment industry cut this year's consolidated profit by 39 per cent to only VND370 billion. Its consolidated revenue is also adjusted down 5.7 per cent to VND16.5 trillion, from VND17.5 trillion.

The adjustments are due to the declines in production and business results of the company in the first nine months of the year. In particular, its net revenue and profit after tax fell 14.2 per cent and 81.6 per cent on-year, respectively. 

In addition, the market forecast for the industry in the last months of 2023 is not as expected when the fourth quarter's orders of the majority of Vinatex's units are not enough.

In the seafood export industry, Sao Ta Foods JSC (FMC) has cut its total revenue target for 2023 to VND4.87 trillion and profit before tax to VND300 billion, down 17 per cent and 25 per cent from the original plan, respectively. This profit target is also 6 per cent lower than last year's performance.

Meanwhile, for the steel industry, Vietnam Steel Corporation (VNSteel) has approved an adjustment to reduce the parent company's profit before tax target from VND52 billion to just VND1 billion after a loss of nearly VND200 billion in the first nine months of 2023.

In other industries, Vissan and Danameco Medical also announced to lower this year's results by 16 - 24 per cent from the previous plans.

Source: VNS