After a long period of hesitation, the Vietnam National Coffee Corporation (Vinacafe) is being pushed towards equitisation once more by the Ministry of Agricultural and Rural Development (MARD).
During a meeting on Monday at Vinacafe’s headquarter, Deputy Minister Ha Cong Tuan said he was not completely confident about the company’s latest restructuring plan.
According to Vinacafe, the company has formulated and submitted to the MARD a reorganisation and modernisation scheme for the period 2017-2020, while waiting for the Prime Minister’s consideration and approval.
It proposes equitisation at the parent company (Vinacafe), including seven agricultural companies and three other auxiliary units, plus the equitisation of 18 other subsidiaries, dissolution of four and the possible splitting-up of one.
The said plan will be Vinacafe’s third approved scheme since 2012. But Tuan was doubtful it would sit well with the Government this time.
He also expressed the Government’s firm decision on getting Vinacafe listed on the stock exchange, regardless of any difficulties that may arise.
In 2017, the corporation managed to equitise five subsidiaries. Nonetheless, there remain unresolved issues for each one, ranging from unapproved land usage to financial troubles, significantly prolonging the evaluation period and delaying the ultimate listing deadline.
Deputy Minister Tuan said Vinacafe has made very slow progress in implementing the plan’s content, compared to other State-owned enterprises.
He questioned the reason why two previous installments of Vinacafe’s restructuring plan failed, whether for reasons of feasibility or capability, while asking the company to better define its production and business orientation.
The MARD has requested Vinacafe lessen their dependence on the existing 16,500 hectares of coffee plantation, and develop a vertically integrated chain of purchasing, processing, and export. But it seems like they have failed to grasp a larger market share.
Vinacafe set a 2018 revenue target of over VND3.8 trillion (US$169 million), with a revenue goal of VND96 billion ($4.27 million).
At the end of 2017, the corporation reported revenue of VND3.7 trillion ($164.8 million). However, net profit came to just over VND77 billion ($3.4 million), just 73 per cent of the yearly goal.
The reason for the decrease in profit is a significant drop in coffee prices during the first quarter of 2017, coupled with reduction in farming area, leading to decreased productivity and general profit.
Vinacafe has made promises to focus on intensive investment, increasing productivity, lowering prices while stabilising output, in the hope of increasing quantity, export turnover and achieving a better growth and efficiency targets than 2017’s.
According to figures released by the General Statistics Office, coffee exports in the first two months of 2018 are estimated at 336,000 tonnes, up by 17.6 per cent year-on-year.
The export value of coffee reached $652 million in the first two months of 2018, a slight increase of 0.8 per cent over the same period in 2017.