Mr. Le Cu Tan - President&CEO of DPM received the award for Top 5 Companies
with Best Corporate Governance in 2019
PetroVietnam Fertilizer and Chemicals Corporation (PVFCCo, stock code DPM - HOSE) has had a successful year of overcoming challenges in 2019, which is the premise to best complete its business plan in 2020 under difficult conditions due to Covid-19 pandemic.
In fact, the year of 2019 proved challenging for fertilizer companies. The demand for fertilizer dropped sharply due to unfavorable weather conditions, prices of agricultural products reached lowest levels, making farmers skip crops and area of cultivation dropped sharply. In addition, unreasonable tax policy for the fertilizer industry had been acknowledged, has not yet been addressed.
According to the Vietnam Fertilizer Association, the changing of fertilizer products subject to 5% VAT to non-VAT products according to Law No. 71/2014/QH13 continues to create barriers for the development of domestic fertilizer production while facilitating foreign fertilizer "massively imported" into Vietnam.
With this VAT policy, VAT of input materials for fertilizer production is non-deductible, causing enterprises to account into production and business costs, making the price of fertilizer products increase by more than 5%.
Moreover, Phu My Fertilizer Plant had to stop working for a long time, making it more difficult to resonate with DPM, especially during peak season at the end of quarter 1 and quarter 2, there was a shortage of products for sale.
In such context, DPM had implemented several synchronous solutions to overcome these challenges, including the implementation of thorough cost reduction. In 2019, DPM’s consolidated sales and management expenses decreased by 14% compared to the plan (equivalent to VND 153 billion), energy saving costs reached VND 101 billion.
After the Plant came back to operation, DPM had implemented drastic solutions to maximize production output, promote consumption, and maintain market share to complete plans in 2019.
Regarding production, DPM had produced nearly 708 thousand tons of urea, reaching 106% of the plan and completing the plan 15 days ahead of schedule; UFC85 reached 11,766 tons, fulfilling 109% of the plan and increasing by 6% compared to the plan in 2018; NPK reached 84,499 tons, fulfilling 56% of the plan but increasing by 45% compared to the plan in 2018; NH3 reached 61,453 tons, fulfilling 134% of the plan and increasing by 9% compared to the plan in 2018.
Regarding business, right after the Plant came back to operation, it had accelerated in supplying products to regions. Especially in the fourth quarter of 2019, Phu My urea output increased by more than 39% compared to the same period in 2018, contributing to exceeding 2% compared to the business planning targets of Phu My urea products in 2019.
DPM also promoted consumption of other products, in which NH3 product consumption is a bright spot with nearly 59 thousand tons, reaching 131% of the plan and increasing by 12% compared to the plan in 2018; Phu My NPK reached more than 93 thousand tons, in which the consumption of NPK produced by the Plant reached nearly 77 thousand tons; the consumption of other fertilizer products reached nearly 208 thousand tons, etc.
According to the Consolidated Financial Statements, with many efforts in 2019, DPM had achieved total revenue of VND 7,831 billion and total profit before tax of more than VND 467 billion, exceeding VND 263 billion, equivalent to 2.3 times higher than the approved plan, which is VND 205 billion.
In 2020, DPM sets a target of VND 9,237 billion in revenue, VND 513 billion in profit before tax, respectively increasing by 18% and 9.8% compared to the implementation in 2019. Moreover, the corporation plans to pay 10% dividend. This is a challenging plan under serious and prolonged conditions of epidemics which affect production activities of the corporation, as well as severe drought and salinity in the Central Highlands provinces and Mekong Delta.
However, in the middle of difficulty lies opportunity. Investors are expecting a sharp fall in oil prices and DPM is mainly engaged in agriculture - an area which is considered as a pillar when the economy is in difficulties so that the Corporation can take advantage of opportunities to increase gross margin.
Closing session on 01 April 2020, DPM shares increased by 7% at the current price of VND 12,250/share, much lower than the book value of VND 20,855/share.