ACV makes bank on yen fluctuations

February 05, 2017 | 20:00

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Airports Corporation of Vietnam (AVC) recorded VND2.049 trillion ($90.4 million) of after-tax profit in the fourth quarter of 2016, mostly thanks to the depreciation of the Japanese Yen.

According to ACV’s consolidated financial report for the fourth quarter of 2016, the revenue was VND4.044 trillion ($178 million). The cost of goods sold in this quarter was VND3.171 trillion ($140 million), therefore, the gross profit only amounted to VND873 billion (over $38 million), equivalent to a gross profit margin of 22 per cent.

However, income from financial activities was VND2.319 trillion ($102.4 million), mostly thanks to an unrealised exchange rate difference gain of VND1.646 trillion ($72.82 million), a realised exchange rate difference gain of VND236 billion ($10.42 million), and the VND223 billion ($9.85 million) gained from interests on deposits.

By the end of 2016, ACV’s total liabilities stood at ¥72 billion (VND14.227 trillion/$630 million), make up 31 per cent of its total funds. Thus, the fluctuations of the Japanese Yen significantly affect the company’s profit. During the second quarter of 2016, ACV had a loss of VND63 billion ($2.8 million), but in the next quarter, it gained a profit of VND757 billion ($33 million) due to exchange rate differences.

ACV has a monopoly over the administration and exploitation of twenty two commercial airports in Vietnam. According to Rong Viet Securities, ACV has long-term opportunities to grow because (1) Vietnamese income is at a low level but is rapidly rising, (2) airport services (land leasing, advertising, and selling goods) are very profitable but are limited and rudimentary in Vietnam in comparison with other countries, and (3) Important projects will be implemented more efficiently and effectively with enhanced private sector involvement. Perhaps the crowning jewel of these projects will be Long Thanh Airport, awaiting development at the hands of ACV.

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