BizLIVE - EVN - parent firm expects to earn a profit of $31 million and the whole group would book a profit of up to $132 million this year, according to Dinh Quang Tri, deputy general director of EVN.
EVN Expects Profit at $132 Million This Year
Dinh Quang Tri, deputy general director of EVN. Photo: EVN
Although EVN’s revenue has risen sharply in the year to date, the group has incurred a loss of nearly 700 billion dong ($31 million). Could you explain why?
According to its financial statement, EVN-parent firm earned a profit of 115 billion dong ($5 million) in the first half of this year. Meanwhile, the group posted a consolidated loss of over 700 billion dong ($31 million).
EVN’s consolidated financial statement include the operations of EVN-parent firm and nine corporations, which are three power generation corporations, National Power Transmission Corp (EVN-NPT) and five regional power corporations.
There are two causes to EVN’s consolidated loss. First, as the dry season falls in the first six months of this year, EVN had to increase generation and purchase of power from plants fueled by oil, gas and coal, resulting in higher production costs.
Second, differences in exchange rates between the dong and other hard currencies (i.e. the devaluation of the Vietnamese dong) led to a loss of six trillion dong in the six-month period. Consequently, this forex loss caused EVN to have a consolidated loss of 700 billion dong.
It is estimated that the group’s financial performance will see improvements in the nine months through September. EVN-parent firm could have a profit of over one trillion dong while EVN’s consolidated profit would be higher, as power production of hydropower plants is poised to increase during the rainy season.
EVN expects to have a profit of over one trillion dong in the first three quarters of this year thanks to better-than-expected output at Son La, Hoa Binh and Lai Chau hydropower plants.
You mean that differences in exchange rates were the main factor after EVN’s loss?
We had a loss of over six trillion dong due to the reevaluation of the forex rate. According to the Ministry of Finance’s regulations, this loss is factored into production costs, i.e. this entire loss would be included in power production costs.
Many people are worried that EVN would raise electricity prices following that loss. What’s your opinion?
This loss belongs to the semi-annual financial period. In fiscal year 2016, we expect EVN-parent firm to have a profit of 650-700 billion dong and the whole EVN to have a profit of between two trillion and three trillion dong.
I believe that EVN now finds itself in good financial health and we have restructured loans and have divested stakes under Decision 1782 of the Prime Minister.
Specifically, EVN has completed divestment from the banking, finance, real estate, insurance and securities sectors, booking proceeds of over two trillion dong. These proceeds are used to reinvest in electricity projects. Therefore, EVN’s financial performance is quite good.
Thank you very much!