Many listed firms, although having not extracted provisions for forex risks, have pointed to the depreciation of Vietnam dong against other currencies as a key reason behind their poor third-quarter earnings.
In the third quarter this year, Ha Tien No.1 Cement Co. (HT1) suffered losses of VND22.3 billion compared to a profit of VND115 billion in the same period last year. The reason was said to be the higher import clinker price plus the 6% depreciation of dong against the U.S. dollar.
Meanwhile, many companies in the plastics sector have incurred losses as 90% of materials in the sector are imported. Thieu Nien Tien Phong Plastic Co. (NTP) and Tan Tien Plastic Co. (TTP) still have profits in the quarter but their profitability was deeply eroded compared to the same period last year.
Nguyen Dao Thinh, chairman of Vietnam Petroleum Transport Co. (VIP), said that in the first half this year, the company had to extract the provision of VND10 billion for a bank loan of US$60 million and would continue extracting much more by the end of this year given the increasing dollar price.
Pha Lai Thermal Power Co. (PPC) obtained VND120 billion in pre-tax profit in the third quarter this year and VND582 billion in the three quarters ended September. However, provision for forex risks has not yet been deducted from this figure.
The company has taken out a loan of 32.5 billion Japanese yen while the yen price has risen by VND20.18 since late last year, meaning it will have to set aside over VND655 billion by the end of September as provision for the forex risk. That means the company would suffer a loss of VND70 billion.
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