COM Announces Lower Revenue and Net Income for 2024, Citing Economic Challenges
COM’s shareholders approved a 4 trillion VND revenue target for 2024, an 8% decrease compared to the previous year. Net income is projected to reach 16 billion VND, marking a 53% decline. The dividend payout ratio was set at 15% (1,500 VND per share), consistent with the previous year.
Behind this conservative outlook lies COM’s forecast of a challenging operating environment in 2024.
|
COM’s Historical Results and 2024 Targets
Source: VietstockFinance
|
Firstly, the global economic and political landscape remains volatile and unpredictable, posing risks to Vietnam’s economic recovery prospects. Oil and gas prices are also expected to fluctuate due to geopolitical tensions, including the ongoing conflict in Ukraine.
Secondly, Decree 80/2023-NĐ-CP, which came into effect on November 17, 2023, requires fuel prices to be adjusted every seven days. This poses significant operational challenges for COM, particularly in managing inventory to minimize losses and maximize profits. The decree also permits retailers to purchase fuel from multiple wholesale suppliers and mandates the use of electronic invoices, further impacting COM’s business operations and increasing its costs.
Thirdly, traffic diversions, infrastructure construction projects, and road improvement initiatives, as well as restrictions on heavy-duty vehicles, are expected to affect the operations of COM’s branches.
Fourthly, COM’s branches 21 and 34 may be forced to cease operations in late May and August 2024, respectively, if their current contractual arrangements are not converted to lease agreements to comply with regulations imposed by the Ministry of Industry and Trade regarding fuel retail licensing. As these are major branches, their closure could significantly impact COM’s sales volume. Additionally, the acquisition of new branches has become more challenging due to state-owned enterprises being subject to competitive bidding for land leases.
Fifthly, various operating costs are anticipated to continue rising, including land rent, utilities, and insurance premiums. COM also plans to invest in new tanker trucks to replace five vehicles expiring by the end of 2024. Moreover, investments in equipment, invoicing software, and upgrades to business facilities may further contribute to increased expenses.
COM’s 2024 Annual General Meeting of Shareholders. Photo: Chau An
|
Regarding executive compensation, the AGM approved a monthly remuneration of 10 million VND for the Chairman of the Board, 7.5 million VND for each member of the Board of Directors, and 5 million VND for the Head of the Supervisory Board and its members.
The AGM also approved the dismissal of Mr. Bui Huy Thang as a Supervisory Board member and the appointment of Ms. Tran Thi To Nhi as a new member for the 2022-2026 term.
First Quarter Performance at 20-25% of Annual Target
CEO and Board Member, Mr. Le Tan Thuong, reported that COM achieved approximately 20-25% of its annual revenue target in the first quarter. Detailed figures will be released soon. Based on this percentage, the company’s estimated net income for the first quarter is around 4 billion VND, almost ten times higher than the same period last year.
Mr. Thuong also discussed the implications of the decree requiring the issuance of retail fuel invoices. He explained that under this regulation, an invoice must be generated for each fuel retail transaction, resulting in significant cost increases.
“Previously, we only issued invoices if a customer requested one, and we would compile a summary at the end of each day. Now, we must issue invoices for all transactions, regardless of whether the customer takes them. The number of invoices has increased approximately 39 times since the regulation came into effect. The costs are substantial, and we will conduct a detailed assessment after one to two months of operation,” said Mr. Thuong.
Regarding the reduction of fuel price adjustment intervals from 10 days to 7 days in 2023, Mr. Thuong expressed concerns that the shorter interval posed challenges for retailers like COM, as there are typically two non-business days within a seven-day period. This has led to practical difficulties in managing inventory.
COM’s 2024 AGM concluded with all resolutions being approved.
