“Hug” the bankruptcy line
The history of revenue and earnings drag each other as inventory increases occur in many companies (DN), different industries. Even in the case of small businesses, this situation persisted, causing them to close or stop working.
Mr. Nguyen Huynh Phu Lam, Director of Hai Binh Cashew Company (Gia Lai), said that before the translation, the company sells on average every day through supermarkets and tourist attractions around 100 million VND, now only The most sold. get 10 – 15 million dong. As for the quarantine season, one day nothing can even be sold.
“We closed the factory, it has been closed for almost 6 months. Because the goods sold are primarily for tourism, customers do not know who to sell to. Products initially lagged behind, but we were able to sell them cheaply to butter and bakery establishments, so the damage was significantly reduced. However, due to the amount of goods that are consumed in the country, mainly serving foreign tourists, the flight route has been closed for a long time, so many establishments cannot sell, “embraced” the goods awaiting bankruptcy ” said Lam. said.
More tragic, perhaps to mention TC (Ho Chi Minh City) handicraft production facility, specializing in the production of handicrafts such as bamboo baskets, bamboo items, mainly for tourists. TC clients cover from Ho Chi Minh City, Nha Trang, Da Nang, Hanoi. However, in the last 5 months, the establishment “closed the door, turned off the lights”, the staff quit their job and the owner of the establishment looked for someone to move to the entire store and workshop because… he had no money. The owner of the establishment, Ms TV, said that even in the large distributors and two wholesale markets of Ben Thanh and An Dong, every day she gave up 10 to 15 million VND goods, adding other tourist destinations across the country , each month income is 600 million dong. But so far, social media inventory on sale at half price, but no one asked to buy all week.
Similarly, large companies are seeing an increase in inventories, as Viet Tien Garment Joint Stock Corporation reported that in the first 6 months of 2020, total assets reached 5,245.7 billion VND, an increase of 5% compared to the beginning of the year, but revenues decreased. 18% and the profit before tax was only 38 billion, 82% less compared to the first 6 months of 2019. In which, the value of Viet Tien’s inventories at the end of June also increased by more than 384 billion VND compared to the end of the year. in 2019, to 1,478.5 billion VND.
Song Hong Garment Joint Stock Company also has an increase in inventory value of 93.8 billion dong compared to the end of 2019. Song Hong Garment’s total assets at the end of June 2020 have increased by 166.2 one billion dong. But the company’s revenue also fell 13% year-on-year to 1,901.5 billion dong and pre-tax earnings fell almost 44% to 149.44 billion dong. Similarly, Ha Tien Cement Joint Stock Company 1 announced the report of the first 6 months of 2020, the company’s net income reached 3,767 billion VND, a decrease of 13.7%, and the profit before tax reached 397 1 billion VND, equivalent to the same period of 2019. Only the inventory of the first 6 months of 2020 increased to 911.67 billion VND, 152.7 billion VND more than at the end of 2019 …
It leads to bad debt
Mr. Dang Van Son, Vice President and General Secretary of the Vietnam Pulp and Paper Association, said that due to the translation of Covid-19, the paper industry had difficulties in both sources of raw materials and consumption of products.
In particular, printing paper and writing paper were more affected by the prolonged break in the school block, the sharp increase in the online meeting and learning model, which caused a sharp decrease in demand, especially for photocopy paper. Specifically, the consumption of newsprint in the eight months of this year decreased by 28.9% compared to the same period of the previous year; coated printing paper decreased 24.3%; other types of paper decreased 17.3% … Especially, the export of printing paper and writing paper decreased 53.8% and votive paper decreased 3.5%. The demand for paper packaging for domestic consumer goods and for export has even decreased. Since then, company inventories have increased, capital flows have dried up.
Mr. Son, for example, if before the inventory of many companies was only 1-2 weeks, but now it has increased to about 3 months of production, this is a very dangerous situation because it forces companies to reduce production. Vacation machines, at the same time, are only sold at low prices (eliminate depreciation costs, eliminate profit …) to maintain operations, retain employees.
“Although the number of niche products is very small and companies were not interested in the past, now they have to explore to keep operations. Similarly, finding new export markets is also quite difficult, more expensive, but still needs to be done to boost consumption. According to the association’s forecasts, perhaps from mid-2021, the new market will be less difficult, ”said Mr. Dang Van Son.
Dr Le Dat Chi, Deputy Director of the Faculty of Finance (Ho Chi Minh City University of Economics), said that the inventory of companies increased due to the general outlook of the economy affected by the translation of Covid-19 due to demand down. short. This also shows the slowdown in the circulation of money in the economy. The companies themselves have stagnant capital in manufactured goods, but they are piled up in warehouses or unfinished materials are left behind. If this continues, many companies will lack capital and the ability to pay debts will cease to exist. The consequences will also increase the risk of delinquency in the banking system.
Therefore, according to Dr. Le Dat Chi, it is possible to look at the inventory index of each industry group to choose any solution to support businesses quickly and conveniently. Especially, it is a policy to stimulate consumption, from public consumption to people’s consumption, that inventory can be released. Or even extend the time of debt freezing and rescheduling for companies heavily affected by Covid-19 …
The report for the first 6 months of 2020 published by the Ministry of Industry and Commerce announced that the inventory index for the entire manufacturing industry was estimated to be quite high 78.9%. In which, some industries have a high inventory rate such as: textile 118.7%; wood processing and production of wood, bamboo and cork products 104.7%; chemical production and chemical products 103.4%; production of motor vehicles 97.3%; production of products from other non-metallic minerals 96.5%; food production and processing 96% …
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