Last minute adjustments

Just 3 days before the end of 2023 (December 28), Southwest Petrochemical and Fertilizer Joint Stock Company (PSW) of Chairman Pham Quy Hien suddenly announced a resolution of the Board of Directors (BOD) on adjusting down many business targets for 2023.

Specifically, the 2023 after-tax profit plan was adjusted from VND20 billion set at the beginning of the year to VND4.04 billion. The revenue plan decreased from VND4,148 billion to VND2,870 billion.

The 2023 revenue and profit plans were revised downwards sharply in the days before the end of the year. The adjusted profit was five times lower than the plan approved at the annual shareholders' meeting at the end of April.

Southwest Petrochemical and Fertilizer adjusted its business plan at the last minute in the context of the company's unfavorable business situation and it was very difficult to achieve the initial target. In 9 months, PSW's after-tax profit only reached over 5.1 billion VND and revenue reached nearly 2,193 billion VND.

With the new plan, PSW exceeded its profit target by 24% and completed 77% of its revenue target.

Also with the new lower 2023 business plan, PSW sets the 2024 after-tax profit target at 12 billion VND, 3 times higher than the newly set profit target.

Southwest Petrochemical and Fertilizer is not the only enterprise adjusting its 2023 business plan. Many other enterprises, including many large corporations and groups, have also made similar moves.

Just over a week before the end of fiscal year 2023, the Board of Directors of Vietnam Rubber Industry Group (GVR) issued a resolution to adjust down the consolidated business plan for 2023.

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Many businesses do not achieve the business results set at the beginning of the year.

Accordingly, the revenue plan was adjusted down nearly 12% from VND27,527 billion to VND24,243 billion. Profit after tax was adjusted down more than 21% from VND4,264 billion to VND3,363 billion.

The reason for the adjustment was given as "must complete the parent company's business plan".

Vietnam Rubber Group adjusted its business plan in the context that in the first 9 months of the year, this enterprise only achieved about 60% of its revenue and profit plan.

With the new plan, revenue and profit both decreased sharply compared to the results achieved in 2022, even though world rubber prices were on an upward trend throughout the past year (decreased by 12% and 29%, respectively).

After a tough year, looking forward to a brighter 2024

It can be seen that a common point of many businesses adjusting their business plans is that they will face many difficulties in 2023. Only by adjusting their targets can businesses complete their business plans.

Previously, Petrolimex Petrochemical Company (PLC) also adjusted its 2023 profit plan down 30% compared to the old plan. According to the new plan, after-tax profit is expected to decrease from VND160 billion to VND112 billion. Revenue decreased from over VND8,900 billion to VND8,395 billion.

Like PSW or GVR, Petrolimex Petrochemical also had unimpressive results in the first 9 months of the year, with after-tax profit decreasing by more than 26% compared to the same period to more than VND81 billion.

Sao Ta Food Joint Stock Company (FMC) - a business in the ecosystem of Mr. Nguyen Duy Hung (SSI Securities) has also adjusted down 25% of its revenue and profit plan for 2023 to VND 4,870 billion and VND 300 billion.

In the preliminary report, the trillion-dollar shrimp enterprise estimated revenue of VND4,800 billion and profit of over VND300 billion in 2023, both of which met the (adjusted) target. However, compared to the same period, FMC's revenue and profit both decreased by about 11% compared to the previous year.

Vietnam Textile and Garment Group - Vinatex (VGT) also lowered its 2023 revenue target by 6% at the end of November, from VND17,500 billion according to the old plan to VND16,500 billion. The profit plan decreased by nearly 40%, from VND610 billion according to the old plan to VND370 billion.

In the first 9 months, Vinatex recorded a nearly 14% decrease in net revenue to VND12,187 billion, while after-tax profit decreased by 94% to VND37 billion. Vinatex has only achieved about 70% of its annual business plan.

It can be seen that businesses in many industries recorded difficulties in the first 9 months of the year. Not only rubber or seafood, industries expected to perform well such as steel thanks to the Government's efforts to boost public investment... also recorded many difficulties.

Vietnam Steel Corporation - VNSteel (TVN) faces consecutive losses and reduces the parent company's pre-tax profit target from 52 billion to 1 billion VND.

In the first 9 months of 2023, VNSteel recorded 2 out of 3 quarters of losses. In the first quarter, TVN made a profit of more than 64 billion VND, but in the second and third quarters, the company lost 255 billion VND and 155 billion VND, respectively. With such a situation, the goal of making a profit in 2023 seems very difficult.

With real estate, many businesses are still facing difficulties as the real estate market is still sluggish. The financial health of companies is still very weak, the burden of bond debt has eroded their wallets in the context of cash flow from sales which is already very tight.

Saigon Real Estate Corporation - Saigonres (SGR) also had to adjust its profit plan down 3.2 times compared to the target set at the beginning of the year to 99 billion VND. In the first 9 months of 2023, Saigonres recorded a 92% decrease in revenue compared to the same period to 47 billion VND. Profit decreased 76% to less than 50 billion VND.

For many businesses, adjusting their business plans is a last resort due to unexpected and unavoidable difficulties. However, some businesses set their business plans too high at the beginning of the year even though they saw that the situation was not favorable. DIC Corp. (DIG) is such a case. Although the real estate market is forecast to face many challenges in 2023, this business still set an ambitious plan with pre-tax profit increasing 7 times compared to 2022. In 9 months, DIG has only completed 10% of its target.

In fact, adjusting targets helps units complete their annual plans, while creating a lower level for a breakthrough in the new year. Talking about a positive business outlook is easier to hear than talking about a negative outlook.

However, poor planning and frequent adjustments to the plan will also reduce the trust of shareholders and partners in the management board. It can also cause stock fluctuations that do not closely follow the health and prospects of the business.

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