June 18, 2012

Vietnam's MPC coping to alleviate debt pressure

After it had poor performance during the last two quarters, Minh Phu Seafood Corporation (MPC) is struggling to deal with a huge debt amount.

Its current liabilities amounting to VND4.59 trillion (US$219 million) at end-March, accounted for 73% of MPC's total assets. Of the sum, VND3.47 trillion (US$166 million) was short-term debt, according to the company's first quarter financial statement.

The company has been pouring money in Minh Phu shrimp processing plant in the southern province of Hau Giang, Loc An and Hoa Dien fisheries companies while these projects have not brought in profit due to their sluggish progress.

The seafood exporter will not pay dividend for 2011 as it made a net profit of VND283.7 billion (US$13.6 million) on revenues of VND7.04 trillion (US$336.5 million) last year, finishing only 46.09% and 93.55% of the full-year plans, respectively.

In January-March, MPC obtained a consolidated net profit of VND63.26 billion (US$3.01 million), up 24.55% on year, while revenues soared 31.56% to VND1.65 trillion (US$79 million). However, financial costs surged 37.39% on year to VND114.54 billion (US$5.5 million).

The company is making greater efforts to cut financial costs from bank loans. It will ask for loans in US dollars to import raw materials and machinery. Besides, it is seeking to issue 30 million new shares to reduce the debt.

However, these measures may expose high risks, the newspaper said, explaining that foreign exchange rates are still fluctuating and US dollar prices have been rising recently; and shareholders may be not interested in its shares which will be offered at not below VND40,000 (US$1.91) each, much higher than its current market price, at around VND30,000 (US$1.43).

The exporter can fulfil its ambitious targets set for this year [a net profit of VND715 billion (US$34 million) on revenues of VND10.48 trillion (US$5 billion)] only when it raises the output of the Minh Phu-Hau Giang shrimp processing plant by 2.5 folds to 2,500 tonnes per month, the newspaper said.