Corporate earnings were forecast to slow in 2020 as the economy became more vulnerable to external factors, data firms and securities businesses forecast.

Fertiliser prepared for transport at PetroVietnam Ca Mau Fertiliser JSC
(Photo: www.pvcfc.com.vn) 

A number of companies have set lower earnings targets for 2020 compared to the previous year as the economy suffers from volatility in international markets.

Rising tensions between economic powers such as China, the European Union and US, changes of political-economic policies, and epidemics are threatening to slow global economic growth.

PetroVietnam Ca Mau Fertiliser JSC (HoSE: DCM) has forecast its pre-tax profit may fall 83 percent year-on year to 52 billion VND (2.24 million USD), stopping the company from paying a cash dividend for 2020.

Binh Son Refining and Petrochemicals Corp (UPCoM: BSR) announced its post-tax profit in 2020 may fall 41.4 percent on-year to 1.3 trillion VND.

In a corporate earnings report released by data analysts FiinPro, revenue and profit growth among non-financial companies was slowing.

Revenue posted by these grew modestly by 4.2 percent on-year in 2019, while post-tax profit growth rose 9.3 percent on-year, according to the report.

In the fourth quarter alone, net revenue among those companies edged up only 1.2 percent while post-tax profit gained 18.8 percent on-year. 

Earnings before interest and tax (EBIT) and earnings before interest, tax, depreciation and amortisation (EBITDA) grew only 1.5 percent and 1.1 percent in 2019, which was a deceleration compared to the previous year.

“Profit growth was mostly contributed by financial income from transfers of contributed/divested capital or gains in other incomes,” FiinPro analysts pointed out.

VNDirect Securities Corp (VNDS) and Vietinbank Securities Co (VietinbankSC) forecast profit growth for listed companies would be 15-18 percent on-year in 2020.

But if profits made by banks and “Vin” companies were excluded, profit growth for the remaining listed firms may be only 3 percent.

The forecasts made by FiinPro, VNDS and VietinbankSC have not counted the effects of the coronavirus, known as SARS-CoV-2, which has spread across Asia and Europe and dampened expectations for the recovery of the global economy.

If affected countries were unable to take control of the situation quickly, the epidemic would have severe impacts on global economic growth, and Vietnamese firms would be badly affected.

Global markets were underestimating the impacts of COVID-19 on the global economy, showing signs that global stocks would continue to fall and safe assets such as bonds and gold would continue their uptrend, Ngo Quoc Hung, senior analyst at MB Securities Co, said.

As of 3pm on February 24, gold prices on the Vietnamese market reached 49.4 million VND (2,128.66 USD) per tael (1,766.4 USD per ounce). On global markets, spot gold gained 2.63 percent to trade at 1,686.64 USD per ounce.

According to Nguyen Anh Khoa, head of analysis and investment at Agribank Securities Co, the forecasts had not priced in the impact of COVID-19 on the economy, so the final results would be significantly different.