Vinacomin navigating to ensure efficiency

Vinacomin cleared its short-term loan balances by the end of last year

For the first half of this year, the group (Vinacomin) reportedly produced 20 million tonnes of raw coal, 25 million tonnes of commercial clean coal, and unloaded 64 million cubic metres of rock and soil, consuming 25.3 million tonnes of coal.

In the same period, the group provided more than 21 million tonnes of coal for electricity production, reaching 55 per cent of the plan; increased by 16 per cent, equivalent to an increase of 3 million tonnes compared to the same period in 2022. The first 6-month revenue of the group is estimated to have reached nearly $3.7 billion.

With contracts signed for the rest of the year, the amount of coal supplied is about 18.75 million tonnes and the whole year is expected to reach 39.7 million tonnes, an increase of about 1.2 million tonnes compared to the previous year.

This is mainly due to the increase in volume of build-operate-transfer thermal power plants and Vietnam Electricity (EVN)’s thermal power plants.

This journey through a challenging environment has been characterised by steady profit, with financial reports illustrating compliance with state-decreed debt-to-equity ratios, and the meticulous realisation of its comprehensive business production plan spanning the last four years.

The trajectory of coal demand within the domestic market has seen a significant upswing, mirrored by the soaring price of imported coal, which marked unparalleled heights in 2022.

However, difficulties in obtaining and extending licences, capacity limitations, and incongruities in policy mechanisms have constrained Vinacomin’s coal production capacity.

Despite these constraints, oversight from the government and other relevant authorities, including the Commission for the Management of State Capital at Enterprises, and Vinacomin’s proactive and decisive management enabled the group to overcome such challenges.

The total revenue of the group in 2018 was approximately VND126 trillion ($5.3 billion) and by 2022, it had increased to about VND171 trillion ($7.2 billion), representing growth of roughly 36 per cent.

The cumulative total revenue of Vinacomin group over the five years between 2018-2022 hit VND707 trillion ($30 billion), averaging VND141.4 trillion ($6 billion) per year. Pre-tax profits for the group were close to VND5 trillion ($211 million) in 2018, and by 2022, they had risen to approximately VND10.4 trillion ($438.8 million), representing an increase of nearly 108 per cent.

The total accumulated profit of Vinacomin over 2018-2022 was more than VND29.4 trillion ($1.24 billion), averaging nearly VND5.9 trillion ($248.9 million) per year.

“The significant and consistent growth in Vinacomin’s revenue amidst the prevailing adverse economic conditions is indicative of the company’s operational resilience and strategic foresight, and reflects a commendable synthesis of financial acumen and strategic innovation,” said a Vinacomin representative.

The group’s strategic financial manoeuvres and adept capital management have fortified its liquidity position since the commencement of its fiscal term, with a short-term solvency ratio registering at 1.12 times as of December 31, 2022, marking a 0.28 increment from 0.84 times on the end of 2018.

Proactively navigating the financial landscape, Vinacomin has established collaborative accords with a diverse array of banks, creating a robust framework for short-term capital arrangements and ensuring a balanced influx of resources to meet developmental and investment exigencies.

The group’s commitment to meticulous debt management and capital mobilisation has leveraged market opportunities, maintaining its capital utilisation costs at competitive levels compared to prevailing market rates. Especially notable is the parent company’s advantageous positioning in short-term borrowing costs, consistently undercutting the market by 1.5-2 per cent annually.

Such precise financial balancing acts over the years have allowed for the prepayment of maturing long-term debts and the reduction of short-term credit balances.

By the end of 2022, Vinacomin had fully cleared its short-term loan balances with credit institutions, signalling not only a reduction in borrowing but also an enhancement in the overall operational efficiency of the group, contributing to a more streamlined and cost-effective business model.

Vinacomin posts rosy first quarter results State-owned mining conglomerate Vinacomin has reported buoyant performance in the first quarter of the year, with profit touching 45 per cent of the full-year plan, driven by exceptional alumina revenue.