Businesses that are "well-off" thanks to dividends and interest on deposits

Financial activities escaped many firms form losses by revenue sharp decrease due to the Covid 19 pandemic. Photo: Internet

From loss to profit

The Covid-19 pandemic has severely affected aviation businesses, causing a serious drop in revenue while fixed costs remain high. The financial statement of the second quarter of 2021 of Vietjet (VJC) recorded a gross loss of 1,278 billion dong. However, financial activities brought VJC revenue of 1,757 billion dong, up 126% from the same period last year. As a result, VJC erased its gross loss and made profits after tax of 4.5 billion dong.

According to financial statements, out of 1,757 billion dong of financial income, 132 billion dong came from deposit and lending interest, 21 billion dong of realised exchange rate difference and 1,603 billion dong from other financial income.

In six months, VJC's financial income reached 3,138 billion VND, three times higher than the same period last year and profit after tax reached 128 billion VND, 172% above the same period last year.

Similarly, another firm in the aviation sector, Airports Corporation of Vietnam (ACV), also recorded a spectacular reversal thanks to income from financial activities. Specifically, ACV's gross profit was only 74 billion dong in the second quarter of 2021, while selling and administrative expenses were more than 390 billion dong.

Fortunately, due to a financial income of up to 926 billion dong, ACV made a profit after tax of 507 billion dong, much better than the loss of 410 billion dong in the same period in 2020.

In the first six months, ACV's gross profit gained VND 428 billion, a sharp decrease of 64% compared to the same period last year. However, profit after tax grew by 11% and reached VND 1,369 billion thanks to financial income of VND 1,828 billion, up 66%. Financial expenses in the first half of this year of ACV were also only 47 billion dong, while the same period last year was 427 billion dong.

Per the notes to ACV's financial statements, out of 1,828 billion dong of financial income in the first six months of this year, there was 917 billion dong from deposit interest, 871 billion dong of exchange rate difference at the end of the period and 38 billion dong from distributed dividends. Meanwhile, financial expenses dropped sharply due to loss of exchange rate difference in the period were only 595 million dong, compared to 375 billion dong year on year.

Another business making more profit from financial activity revenue is Pha Lai Thermal Power Joint Stock Company (PPC). PPC's financial statements for the second quarter of 2021 revealed a gross loss of 76 billion dong, but thanks to 210 billion dong in revenue from financial activities, profit after tax still reached 120 billion dong. In the first six months of 2021, PPC's financial income of VND 329 billion has converted a gross loss of VND 46 billion into net profit of VND 259 billion.

Of PPC's 329 billion dong of financial income in the first half of 2021, 287 billion dong is dividends and distributed profit, with the remaining 42 billion dong interest on deposits and loans.

From profit to sudden profit

Not only helping businesses escape losses, financial revenue also enabled them to make sudden profits compared to the same period last year.

The financial statement of the second quarter of 2021 of Southern Rivers Joint Stock Company (SWC) recorded net profit of three times higher than that of the second quarter of 2020, at VND 63 billion. This resulted from both the growth of production and business revenue and a significant contribution of financial revenue. SWC's net revenue in the second quarter of 2021 hit VND 226 billion, bringing about VND 62 billion in gross profits, up 138% over the same period in 2020. In addition, financial revenue increase also benefited from substantial financial performance. Specifically, financial income in the period was nearly 54 billion dong compared to nearly 4 billion dong year on year.

The sum of SWC's financial revenue in the first six months of 2021 was VND 58 billion, of which VND 54 billion was dividends and distributed profits, while net profit in six months also increased by 158%, reaching 111 billion dong.

Hoa Binh Construction Group Joint Stock Company (HBC) also recorded some VND 65 billion in financial revenue in the second quarter of 2021, a strong jump compared to only VND 8.6 billion in the second quarter of 2020. Of this, up to 51 billion dong is the profit from the transfer of investments, while this income was not recorded in the same period last year.

The sudden revenue from financial activities brought HBC 58 billion dong of net profit, an increase compared to the profit of only 2 billion dong in the second quarter of 2020, although gross profit in the period fell by 17%.

The financial revenue of VND 103 billion is also a highlight in the business picture of Vietnam Shipping Joint Stock Company (VOS) in the second quarter of 2021, while in the second quarter of 2020, this number was VND 2 billion. At the end of the second quarter of 2021, VOS achieved net profit of 241 billion dong compared to the loss of 32 billion dong in the same period last year.