Many logistics enterprises report high profits

	Logistics enterprises expect a "push" on infrastructure
	Logistics companies expect "positive signals" in the last months of the year
	Fragmentation is pulling back the competitiveness of the logistics industry

In the first half of 2019, the profits of logistics enterprises all showed signs of prosperity. Photo: ST.

Revenue increases thanks to port operations

According to a financial report in the second quarter of 2019 of Gemadept Joint Stock Company (GMD), in the first six months, GMD reported a net profit of nearly VND289 billion, a year-on-year decrease of over 81 percent. In the second quarter of 2019, GMD collected more than VND668 billion, a year-on-year increase of nearly 12 percent. GMD reported net profit of over VND169 billion in the second quarter of 2019, a year-on-year decrease of 35 percent.

In the first six months of 2019, GMD recorded revenue of over VND1,297 billion, a slight decrease compared to the same period last year. GMD collected gross profit of over VND515 billion, up more than 6% over the same period last year. Specifically, revenue from financial activities was over VND105 billion, while for the same period last year, it was more than VND1,546 billion, reducing 93% Notably, financial expenses in the period were nearly VND82 billion while in the same period of 2018, it was minus VND24 billion.

These figures showed that Gemadept's net profit in the first six months of 2019 saw a sharp decline due to the impact of divestment and no longer recording consolidated revenue from logistics and shipping business.

In 2019, Gemadept set a target of VND2,800 billion in consolidated revenue, a slight increase compared to the previous year, and consolidated pre-tax profit was about VND695 billion. Thus, in the first six months, the company has achieved more than 46 percent of the revenue target and 57 percent of the profit target for 2019.

It is known that GMD's business development plan in 2019 consists of operating ports and logistics; considering divestment in some companies; cancelling some business lines such as wood exploitation, direct support services for air transport, wholesale of solid, liquid, gas fuels and related products.

Assessing the prospects of GMD in the future, VNDIRECT Securities Joint Stock Company says that GMD is currently the largest private port operator, holding 7.3 percent of market share of Vietnamese goods. Nam Dinh Vu and Dinh Vu container ports are located in Hai Phong economic zone which is one of the most vibrant economic zones in the North. In addition, GMD will put into operation for phase 1 at Cai Mep port cluster with a capacity of 1.5 million TEUs per year by the end of 2020 and expand capacity of Nam Dinh Vu port to 1 million TEUs per year by 2020 and 1.5 million TEUs by 2022. The total seaport capacity by 2022 will be 3.6 million TEUs, tripling the current level. Besides, the biggest investor in the logistics industry is Saigon Cargo Services Joint Stock Company (in which GMD holds 32% of the shares), bringing VND132 billion to GMD in 2018, up 21 percent over the year before.

Profit falls due to increase in expenses

Another large logistics enterprise, the net profit of the Vietnam Container Joint Stock Company - Viconship (VSC), recorded a significant year-on-year decrease of more than 50.25 percent, only reaching VND43,181 billion. Net revenue of Viconship reached nearly VND474 billion, up 10 percent. Expenses of services provided during the period increased 29 percent, reaching more than VND369 billion. So after deducting expenses, Viconship's gross profit reached more than VND104 billion, down nearly 28 percent compared to 2/2018.

Regarding financial activities, Viconship recorded over VND2.9 billion in revenue, up 54% over the same period, while expenses for loan interests decreased by 45 percent, accounting for more than VND4.9 billion. In the quarter, the company also recorded an additional interest in joint-venture and associated companies of VND4.6 billion. Accumulated in the first half of 2019, the company's net revenue rose by 13 percent, equivalent to more than VND897 billion and net profit of the holding company's shareholders was VND83.5 billion, down 45 percent compared to the beginning of 2018.

Referring to the cause of the decline, Viconship said in the second quarter of 2019, the number of ships arriving at Greenport decreased due to large vessels having to be transported to other ports, resulting in many costs of loading, unloading and transportation. The volume of goods arriving at VIP Greenport port sharply increased more than in the second quarter of 2018, and the volume of scrap at the port also increased, leading to increases in other costs. In addition, prices of fuel and electricity in this period also increased significantly compared to the same period last year. This is the main reason behind the net profit of shareholders of the holding Company in the second quarter of 2019 decreasing by VND43,607 billion, corresponding to a reduction of 50.25 percent compared to the second quarter of 2018. By the end of the first half of the year, Viconship achieved 60 percent of the revenue target and 48 percent of the pre-tax profit target.

Similarly, in the second quarter of 2019, the net profit of VIP Green Port Joint Stock Company (VGR) reached VND46,674 billion, down VND17,291 billion, equivalent to 37.05 percent decrease compared to the second quarter of 2018.

According to VGR, the main reason is that in the second quarter of 2019, the volume of goods in the port continued to rise, leading to increases in production costs such as equipment leasing, labour and shipping. Costs of raw materials, wages and labour increased compared to the same period in 2018. These are the main reasons leading to the decline in profit in the second quarter of 2019 compared to the second quarter of 2018.

Logistics enterprises must stand on their own feet

According to experts, the decline in profit of logistics enterprises in the first six months is mainly due to the production costs suffering high pressure from the increase of gasoline and coal prices. Along with that, some enterprises with lower profit than the same period last year is not because of the worse business situation but because but lack of profits like in previous years.