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PVY: Explanations for loss in the business results in 2017 and solutions
On 13 April 2018, PetroVietnam Marine Shipyard Joint Stock Company explained the reasons for loss in the business results of the Company in 2017 and gave solutions as follows:
The year of 2017 is a particularly difficult year for the company's operations as a result of the loss of business results in 2016 and other internal difficulties as well as general difficulties of the petroleum industry. Due to the weak financial situation, short-term and long-term loans from banks and credit institutions still remain high; There is no source of payment of debts from contractors supplying materials and labor for previously executed projects; Machinery and equipment after long time use need to hav major maintenance and repair. For completed projects such as the project of repairing and upgrading the P14 building work of the Engineer Commander - Ministry of Defense: The contract valued at 242.6 billion dong (VAT included). The project started from November 2016. The project was constructed within 7 months and handed over for the Owner in May, 2017. The project was advanced 115 billion dongs; the remaining amount of over 127 billion dongs has not yet paid by the Owner due to problems concerning the procedures for approving the payment of capital by the government and the departments. This is a large amount of receivables, which had a considerable impact on the company's business and financial situation as the company had to borrow short-term loans from banks in order to have cash flow for the subcontractor, for the procurement of materials as well as salary payment to employees. The Daman Project is constantly delaying, extending the working progress, which makes the Company’s expenses increased. In Nghi Son project, it was expected that the Company would be the EPC contractor for building seven new ships under the project. However, during the process of working with the relevant parties to sign the project contract, due to financial difficulties, the company did not meet conditions for guarantee of contract performance and could not arrange 80% reciprocal capital (the bank only arranges the capital for the project when the contract is signed and the payment is made according to the contractual progress). As a result, the Company did not qualify for the EPC contractor. In order to participate in the project, the Company was only assigned as a subcontractor to build 5 new ships under the project. Contract value is very small compared to the original plan. This has reduced a large portion of expected revenue.
To overcome the above limitations, the Company has carried out many solutions in the same time. On the one hand, the Company strictly controls the costs; improves the salary system; Arranges and improves the organizational structure. On the other hand, the Company concentrates maximally on marketing operation and market development to find new jobs in order to remain activities. With those measures, the Company's operations have gradually come into stability; improved workflow. The company signed three new contracts with the contract value of 200 billion dongs (Long Phu project, Nghi Son project, Salmon project).
In 2018, it is forecasted that the Company's operations continue to be difficult. However, the difficulties have been reduced compared to 2017 because financial situation is less difficult; the company has revenues from ongoing project contracts and debts have been recovered; Losses in production and business activities were initially blocked; The company's machinery continues to be compact and stable. On the other hand, the signal from the results of trade and market shows that the source of work is relatively satisfactory since 2018.
With that situation and through the forecast of the implementation of major projects of the oil and gas industry in 2018, the company will work with PTSC Corporation to receive support and facilitate the company to participate in the winning projects; give solutions to assist the company in restructuring its loans, seeking some strategic investors and restructuring the corporate structure. In the long term, the Company will actively seek and offer to execute projects for building, repairing, converting, periodically maintaining drilling rigs and floating facilities of domestic and foreign partners as well as of partners that the Company has been cooperating in the past. Moreover, the Company will expand into onshore services and wait for opportunities when the market of building mobile drilling platform recovers.
HNX
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