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The price of oil decreased by 60% compared to the end of 2019 and the impact of Covid-19 caused oil and oil production and trading companies to lose trillions of dong.
Consolidated financial statements for the first quarter The Binh Son Refinery and the Petrochemical Company of Shares (BSR): the operator of the oil refinery Dung Quat registered an after-tax loss of more than VND 2.33 billion, while the same period of the last year it had a profit of almost 3,000 billion dong. This is only the second quarter since the first public offering (IPO) in January 2018, this company reported losses.
BSR’s sales also fell by two-thirds compared to the same period in 2019, when it only made nearly VND $ 18 billion in the first quarter.
Dung Quat Oil Refinery. Photos: Trinh Sy.
Crude oil, especially Brent oil in the first quarter fell more than 70%, from more than $ 68.3 a barrel on January 3 to almost $ 17.7 a barrel at the end of March, causing a sharp rise in inventories of BSR. This is the main reason that leads to the loss of BSR in Q1.
When both price and consumption fall, inventories rise rapidly, making COGS higher than the market price. Furthermore, the difference between the price of crude oil and the main products has also decreased seriously, leading to a sharp correction in trade results. Furthermore, the influence of Covid-19 led to a sharp drop in domestic demand for petrochemicals, especially Jet A1 aviation gasoline.
According to BSR, if the oil price situation is not going well and inventories continue to rise, this business may have to consider the situation of stopping the Dung Quat oil refinery for a while.
However, for the foreseeable future, to maintain production, improve cash flow, and avoid downtime, BSR is forced to reduce its factory capacity to an optimal level and negotiate with customers to release products. Inventory. This move partly helped customers’ accounts receivable halve to almost 4.5 billion dong; The value of the inventory of raw materials and goods purchased for travel decreased by VND 1,650 million.
Not only did gasoline and oil producers, such as BSR, suffer large losses, but gasoline and oil dealers and distributors also plummeted in the first quarter of 2020.
The Vietnam Oil Corporation (PV Oil) first quarter financial report recorded a net loss of more than VND 537 billion, while the same period last year was more than VND 38 billion. Total accumulated losses at the end of the first quarter increased to almost VND 1.2 billion.
The volume of domestic oil business decreased by 11%, retail sales decreased by 6% due to the impact of world oil prices, which hinders the commercial situation of PV Oil.
The provision for the devaluation of the inventory of PV Oil in the first quarter also increased sharply, almost 275 billion.
In 2020, this business is expected to reduce revenue by approximately 35% to VND 52.2 billion and after-tax earnings of VND 376 billion. This PVOIL indicator is based on the market forecast at the end of 2019 with the oil price scenario of 60 USD per barrel.
The same situation with Petec Trading & Investment Corporation (Petec) when the first quarter saw a net loss of more than 47 billion dong, while the same period in 2019 was more than 4.5 billion dong. Sales of goods and services also decreased by 15%, to almost VND 841 billion, more than VND 144 billion in the same period.
Staff of a Petrolimex service station in District 1 (HCMC) that supplies customers with fuel. Photo: Nhu Quynh.
First-quarter financial statements have not been announced, but according to the report by the company’s State Capital Management Committee, the Vietnam National Petroleum Group (Petrolimex) is estimated to lose VND 572 billion due to a increase in inventory provision. First-quarter revenue is also estimated at almost 28.5 billion dong, a decrease of more than 1.7 billion dong compared to the same period in 2019.
Petrolimex is a company with a national distribution network, while oil is a commodity that needs to have sufficient inventories. In the first quarter, the world price of oil fell too fast with a wide range (60% less), which affected the cost of Petrolimex inventories.
The expected revenue for the full year 2020 is nearly 12.52 trillion dong, earnings are more than 1.14 trillion dong lower than the plan and it is expected to pay 500 trillion dong to the state budget compared to plan if Covid-19 lasts until fourth quarter
The group also predicts that, as the epidemic situation continues to be complicated, national and international airlines will continue to stop flights, the demand for water and road transport will decrease dramatically, which will cause sales volume to be sold. Low gasoline level, increasing inventories.
Anh Minh
