Faced with a business downturn due to unimproved output, Vicem has been cutting all production costs to have competitive prices, increase cement consumption, review and develop effective kiln operation scenarios.
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| Vicem is having to cut all production costs to have competitive prices and increase cement consumption. |
Consumption is facing difficulties both domestically and for export, revenue is decreasing, in the first 6 months of the year, Vietnam Cement Corporation (Vicem) lost nearly double the same period in 2023.
Specifically, in the 6-month summary report, the Ministry of Construction said that Vicem lost about 863 billion VND, nearly double the loss of 441 billion VND in the same period last year. Vicem is also the leading loss-making enterprise among enterprises under the Ministry.
According to the Ministry of Construction, the pressure of excess domestic clinker production capacity is very large, over 50 million tons, while the construction speed is very slow, leading to bad debt pressure in the cement industry that is and will become a burden for the economy. 
Vicem's board of directors said: "The cement business is losing money due to the following reasons: the domestic real estate market has not recovered, cement supply far exceeds demand; input raw material and fuel prices remain high. Domestic consumption and exports have decreased, inventories have increased, some factories have had to reduce productivity or stop kilns, directly affecting the business performance of the enterprise."
The trend of shifting demand from bagged cement to bulk cement is also the reason for the decline in revenue, because Vicem's brand value has been associated with bagged cement for many years.
“In more than 120 years of Vicem's establishment, there has never been a time as difficult as now,” Vicem representative emphasized.
Total domestic cement consumption last year reached less than 60 million tons, down about 9.4% compared to 2022, and also the deepest decline in consumption in the past 10 years.
In the first 6 months of 2024, cement and clinker production and consumption have not improved, only equivalent to last year, with a total production output of 44 million tons, factories running at 70 - 75% of design capacity; consumption of nearly 44 million tons, equal to the same period.
Enterprises in the industry and enterprises in Vicem's ecosystem are all in a situation of plummeting sales revenue, at least reduced profits, and mostly losses. Dozens of production lines have had to temporarily stop production, accept exports below production costs, and are facing extremely difficult finances...
Vicem's audited consolidated financial statements for 2023 also recorded a post-tax loss of up to VND1,129 billion, in contrast to a profit of nearly VND642 billion in 2022.
Last year, the manufacturer's revenue reached just over VND24,006 billion, down 19% compared to 2022. Cost of goods sold decreased more slowly, causing last year's gross profit to drop to VND1,923 billion, only about half of the same period last year.
While sales and administrative expenses were partially optimized, financial expenses continued to increase by 47%, mainly due to interest. The company also suffered losses from joint ventures and associates.
Faced with the problems of the materials industry, including cement, on June 15, Prime Minister Pham Minh Chinh chaired an online conference to resolve the difficulties of the industry. The Prime Minister directed solutions such as building overpasses, building highways, social housing, etc. However, these solutions take time and cannot be implemented immediately.
Faced with declining business and unimproved output, Vicem's solution has been to cut all costs to have competitive prices and seek additional cement consumption channels.
In production, Vicem urges member units to closely follow the market, increase coordination in production, consumption and inventory management, review and develop effective furnace operation scenarios, prevent clinker from being dumped in the yard, and use alternative fuels to save resources.
Regarding consumption, stick to consumption areas, have flexible sales policies to increase consumption, find new distributors in some low consumption areas. Put cement into public investment projects, process cement within Vicem according to the restructuring project with brand merger pairs, prioritize clinker trading and cement processing in member companies to optimize logistics, reduce sales costs.
To boost business in the last 6 months of the year, Vicem representative said, facing the reality of excess supply and lack of output, Vicem proposed that the Ministry of Construction consider approving the plan to adjust and supplement the charter capital.
This enterprise expects that cement consumption demand will improve in the fourth quarter, thanks to faster disbursement of public investment capital and more real estate projects, helping the enterprise improve consumption, revenue and profit.
Most recently, the Ministry of Finance has issued a Decision to inspect compliance with laws on finance, accounting and tax at Vicem and 3 member enterprises, including: Vicem Tam Diep, Vicem Hai Phong and Vicem Ha Tien.
The inspection will focus on issues related to the management and use of capital and assets at the enterprise; accounting for revenue, expenses and reporting on business results; fulfilling obligations to the state budget; and complying with other financial laws and regulations for enterprises.
Source: https://baodautu.vn/vicem-dua-giai-phap-giam-lo-6-thang-cuoi-nam-d219918.html
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