Leading Vietnamese ocean shipping enterprise flooded by losses
Leading Vietnamese ocean shipping enterprise flooded by losses
One of Vietnam’s leading ocean shipping companies, Vietnam Ocean Shipping JSC (Vosco), a subsidiary of Vietnamese shipping group Vinalines, has been operating with massive losses.
As of the end of 2016, Vosco operated 21 ships with a total capacity of 509,447 DWT. Along with ocean shipping as its key business sector, Vosco also supplies other ocean services, including logistics, training and renting sailors, paint and lubricant sale, and ship repair, among others.
Despite of its scale and position in the ocean shipping industry, the company has been bearing consecutive losses. According to its accumulated financial report for the second quarter of this year, Vosco suffered a loss of VND88.5 billion ($3.89 million) in the second quarter alone, increasing the accumulated losses in the first half to VND172.2 billion ($7.57 million).
Especially, as of June 2017, the company held an accumulated loss of VND974.3 billion ($42.8 million), 69.5 per cent of its chartered capital, marking the tenth consecutive quarter of operating without profit.
For its negative business results, Vosco was put on the list of enterprises having the largest losses on the Ho Chi Minh Stock Exchange (HoSE).
According to Dang Hong Truong, a representative of Vosco, in recent times, the increasing supply of ships decreased fares, while the fuel price, which makes up the largest portion of the fare, has been consecutively increasing. The imbalance in revenue and expenditure is the major reason for the company’s losses.
Along with the massive losses, Vosco also bears a massive debt. Notably, as of June 30, 2017, the company owed VND3.55 trillion ($156.08 million).
Previously, Vosco decided to sell its older ships, which have seen significant amortisation, to offset the massive losses. Notably, in 2014, Vosco sold Diamond Star (27,000DWT) and Silver Star (21,967DWT) for $10.5 million.
The sale helped the company to avoid having its listing being canceled by the stock exchange after reporting losses for two consecutive years.
The sale was expected to help the company offset its massive losses and improve business result, however, no positive change has been reported over the past two years.
At the 2017 shareholders’ meeting, the Vosco Board of directors proposed shareholders to sell two other ships, namely Song Ngan and Vinh Thuan. However, to date, there has yet to be official information released about this sale.
In the upcoming time, Vinalines will decrease its holdings in Vosco to 49 per cent.
