Borrowing stonewalls cement firms

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According to Vietnam Cement Industry Corporation’s (Vicem) first-half report, Vicem’s member units raked in VND1.541 trillion ($74.4 million) in pre-tax profits in the first six months of 2011, while its mature borrowing costs amounted to VND1.227 trillion ($59.2 million).

The report also read that of its seven major members including Haiphong, Hoang Thach, Bim Son, But Son, Ha Tien, Hoang Mai and Tam Diep cement companies only Hoang Thach had profits in 2011’s first half. The company earned VND190 billion ($9.1 million) in profits, but its financial costs were also added with VND66 billion ($3.2 million) in the period.

Bim Son and Ha Tien cement companies topped the list of Vicem’s loss-makers. In the second quarter of 2011 alone, Bim Son incurred losses of around VND22 billion ($1.06 million) and Ha Tien VND7 billion ($338,000).

Vicem chairman Le Van Chung attributed its members’ poor performances to the fact that many Vicem cement plants just came online in 2010 and 2011 and they had to repay huge borrowing costs.

Vicem would pay off around VND3.2 trillion ($154.5 million) in debts in 2011, Chung said.

Besides, input material costs were escalating with petrol prices surging 32-43 per cent, electricity price up 15-28 per cent, and coal 41 per cent dearer in prices, meanwhile banking lending rates were 20 per cent, per year.

Besides, financial expenses of cement firms running new production lines also skyrocketed.

For instance, Ha Tien cement company’s financial expenses hiked around VND340 billion ($16.4 million) due to working capital and new loan interests and the exchange rate difference.

Bim Son had to spend VND238 billion ($11.4 million) more on new project loan interests, while But Son’s financial costs were up VND180 billion ($8.7 million) due to exchange rate balance and short-term loan interest.

Loan repayment schemes by some Vicem’s members in 2011:

Haiphong cement company: VND229 billion ($11.06 million)

Tam Diep cement company: VND370 billion ($17.8 million)

But Son cement company: VND29 billion ($1.4 million)

Bim Son cement company: VND154 billion ($7.4 million)

Hoang Mai cement company: VND44 billion ($2.1 million)

Ha Tien cement company: VND397 billion ($19.2 million).