Big Players in the Rice Industry Prepare to Sell Petroleum

Alongside its traditional business of wholesale rice trading, the Southern Food Corporation (Vinafood 2) plans to add petroleum trading to its business lines…

The proposal submitted to the 2019 Annual General Meeting of Shareholders, expected to be held in late July, reveals that Vinafood 2 intends to add four new business lines, including real estate, petroleum agency, retail of motor fuels, and management of road vehicle parking facilities.

However, Vinafood 2 has not yet disclosed detailed investment plans for these new business lines. For the two sectors related to petroleum and fuel trading, the corporation stated that foreign ownership ratios would be restricted. Accordingly, it has proposed that shareholders approve a plan to cap foreign ownership at 0%, even though its previous equitization plan indicated that nearly 23% of its capital would be auctioned to foreign investors.

A representative of Vinafood 2 said that global competition in rice production and trading is becoming increasingly intense, particularly in terms of quality and value. Meanwhile, the ability to access, penetrate, and develop new markets, as well as to participate in global value chains, remains limited for Vietnamese rice-exporting enterprises in general and for the corporation in particular.

In response to these difficulties, the corporation plans to diversify rice products; develop new products and business lines with competitive advantages; formulate and implement a 2019 financial plan aligned with its production, business, and corporate strategies; strengthen and expand relationships with banks and credit institutions to establish credit limits and ensure sufficient capital for 2019 operations; and tighten control over the use of capital and assets at member units in order to preserve capital, avoid waste, prevent asset losses, and minimize bad debts.

In 2019, Vinafood 2 set a revenue target of VND 21,287 billion and a consolidated pre-tax profit target of VND 53 billion. In 2018, due to provisions for inventory devaluation, losses on financial investments, and bad debts after equitization, the company reported a loss of VND 1,772 billion. Although it recorded profits in the first three months of this year, undistributed after-tax profit remains negative at nearly VND 2,000 billion.

According to Một Thế Giới