In 1HY16, PetroVietnam General Services J.S. Corp (PETROSETCO, code: PET) achieved consolidated sales of VND4.785 billion and PAT of VND102 billion, respectively exceeded 6,3% and 21% over the approval plan.
2016 is continuously a difficult year to companies in the Oil and Gas Group in general and to PETROSETCO in particular because of the deep decrease of oil price, mobiles and laptop market’s competition dramatically day by day. Thanks to the efforts of PETROSETCO’s staff and manager team in order to overcome obstacles (stabilizing core businesses, expanding new business activities), 1HY16 results exceeded both targeted revenue and profit approved in the 2016 AGM.
Breakdown of revenue and profit:
Currently, PETROSETCO has 4 main business segments that are Trading and Distribution, Supply chain service, Catering and Property management. Over the previous years, Trading and Distribution used to account for over 70% of total revenue and profit. In 2016 and years forwards, the planned aim of PETROSETCO’s BOM is to focus on increasing profit contribution of business activities that have high profit margins. In the first six months of 2016, Trading and Distribution accounted for over 80% of total consolidated sales while profit was just 50%. Although the rest segments only made up 17% of total revenue, the profit proportion was 50% thanks to stable and high margins.
From November of 2016, Nghi Son Refinery (USD 9 billion investment capital) will be operated for testing. PETROSETCO is a strategic partner in apartment renting, supplying catering and logistics services. Approximately serving 2.000 staffs and engineers working in the project will result in adding estimated profit by VND 10-20 billion per year to total profit.
The decrease of consolidated profit in 1HY16 by 16% compared to the same period a year ago was mainly due to Bien Dong project’s income recorded in Q2 2015 despite the fact that the project had completed for 2 years earlier.
Trading and Distribution 1HY16 recorded an increase of profit by 16,5% over the same period of 2015:
In 2015, because of the fluctuation of oil price, distribution activity of petrochemical products such as LPG and PP faced many difficulties and caused a loss. However, from Q3 2015, changes in business strategy successfully stopped the loss and in 1HY16 a record figure for profit at VND 10 billion was achieved. Moreover, PETROSETCO has developing retailing activity of gas filling in the way of completing business chain model for this type of business.
Mobiles distribution accounted for 60% of revenue in Trading and Distribution. Because of the surprised growth of chain stores, not only PETROSETCO but also other distribution companies have suffered in some way. According to Gfk, Vietnam mobiles market during the first half of 2016 was dominated by Samsung and Oppo. Korean mobiles brand accounted for 34,7% market share, up 5% from the previous year. PETROSETCO still keep up with the growth rate of Samsung. Unfortunately, other mobiles brand were not met targeted growth rates. The first reason was due to the expansion of Oppo (rose 9,2% from 12,6% to 21,8%), Apple (increased from 6,2% to 9,8% not counting unofficial sales) and a domestic new comer, named Mobiistar ( up from 3,1% to 5,8%). The second reason was caused by mass attack of little awareness brands (accounted for 9-10%).
Supply chain service, Catering and Property management:
Due to the continuous fluctuation but in low price of Oil and Gas, domestic and international companies having projects in Vietnam have stopped or postponed the process. Consequently, many business activities of PETROSETCO were affected, especially materials and equipment supplement and catering.
Estimated that oil price will not be recovered soon, subsidiaries of PETROSETCO operating in this field under the guidance of manager team have actively found chances outside the industry. In 2015, PETROSETCO actively developed in supplying materials and equipments specialized for electric industry and has achieved initial successes and received positive feedbacks from customers. In 2016, PETROSETCO keeps expanding current business activities especially focusing on electric industry so that it can compensate for the decrease in the oil and gas industry. The subsidiary that supplies materials and equipments has successfully won in bidding some electrical projects.
Catering has likewise achieved remarkable development since 2015. When the oil price started to decrease, PETROSETCO had actively expanded the traditional business of catering serving not only offshore but also onshore. Currently, PETROSETCO supplies around 10.000 meal per day for customers over the country such as Ha Tinh Formosa project, Phao mountain project, Thai Nguyen Samsung factory, Vinamilk office building, Dung Quat Refinery, etc. It potentially has a large room for expanding in this business and the margin is higher than others therefore PETROSETCO keeps developing this business.
2HY2016 plan:
At the end of August 2016, PETROSETCO will hand over the living complex at Nghi Son to Nghi Son Refinery. This will helpfully contribute a stable amount of revenue and profit for PETROSETCO forwards.
Trading and Distribution: the second half of a year is a strong growth period of mobiles and laptop distribution market. PETROSETCO expects to gain a significant growth of both revenue and profit during this period of time.
Supply chain service, Catering and Property management: besides current list of key customers such as Samsung, Vinamilk, the State bank of Vietnam, etc., PETROSETCO’s BOM lays down as a policy the development of customers out of the oil and gas industry such as banking, FDI companies, big scaled producers, etc. and bidding for supplying the services in neighboring markets such as Malaysia, Philippines, etc. That will consequently help PETROSETCO achieving stable and steady income for coming years. Besides that, PETROSETCO also searches for diversifying business activities in order to increase value for shareholders.
The year of 2016 is still a difficult period of time. Nevertheless, PETROSETCO leadership absolutely believes that all challenges will be conquered by efforts of the whole member within the oil and gas group and power of PETROSETCO team. PETROSETCO will achieve the plan approved by AGM, especially 2016 dividend ratio at least 15% by cash.