Titanic shipping company taking on water

Vietnam's one-time shipping paragon Vosco is deep in the red

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Vosco’s 2016 annual report shows that the company is deep in loss. In particular, Vosco’s total revenue in 2016 decreased to VND1.316 trillion ($57.8 million), a reduction of nearly 23 per cent compared to last year. This is a record-low since Vosco was turned into a joint stock company ten years ago. The company had a negative after-tax profit of VND359 billion ($15.8 million).

As of the end of 2016, Vosco’s total assets were VND4.238 trillion ($186.5 million), of the total, its liabilities were VND3.609 trillion ($158.8 million) and long-term borrowings were nearly VND2.9 trillion ($127.6 million). The company’s financial expenses, including interest expenses and exchange rate difference, were estimated to be nearly VND180 billion ($7.92 million). This amount contributed to the Vosco’s deep loss.

Vosco’s leaders said that the company has implemented numerous policies to enhance its revenue, however, the increase of the US dollar and fuel prices have significantly affected the company’s business.

There is a growing competition in the marketplace and thus, the shipping fees decreased by 30-50 per cent per shipment on average. The shipping efficiency also declined as ports are becoming increasingly overloaded, which lengthens the time for loading and unloading goods.

To break out of its losing streak, in the annual shareholders’ meeting at the end of April 2017, Vosco agreed on cutting down its shipments to 5.3 million tonnes, earning a revenue of about VND1.3 trillion ($57.2 million) in 2017. Regarding after-tax profit, this is the third year Vosco does not set a particular target, instead focusing on minimising losses.

The most important step for Vosco is to implement the second financial restructuring plan by liquidising its assets to stop losses on each specific project and by negotiating the adjustment and timeline of its debts with lenders. At the same time, Vosco keeps looking for investors to divest 8.75 million shares from Maritime Bank.

Vosco’s leader said that currently, according to government orders, Vosco has temporarily suspended paying the matured principal of over VND840 billion ($36.96 million), which was borrowed from Vietnam Development Bank (VDB) to build new ships. Previously, following the support of Vinalines and the Ministry of Transport (MoT), Vosco has dealt with VDB to forgive the loan’s interest and extend the deadline to pay off the matured principal.

If the second restructuring plan does not bring the expected results, Vosco’s stocks may be delisted due to its three consecutive years of losses, like many previous companies, such as Vitranschart JSC and Seagull Shipping Company.

Vosco was established in 1970 and in its glory days, it was the leading company in the shipping industry. Vosco was the first company in Vietnam to provide shipment services to the US, India, and Australia. After operating as an SOE for 37 years, Vosco has been equitised, after which Vinalines, which represents the state stake, held 51 per cent of its chartered capital.