Businesses’ profit margins forecast to fall across the board

By Quynh Trang   July 18, 2020 | 12:00 am PT
Businesses’ profit margins forecast to fall across the board
Workers arrange steel structure in Hanoi. Photo by Reuters/Kham.
Construction and building materials, tourism and entertainment, and petroleum will have the lowest profit margins this year, according to financial data provider FiinGroup.

A study of the business plans of 1,368 companies, accounting for nearly 97 percent of every sectors' capital in the market excluding the financial sector, found that their overall net profit will drop by 23 percent in 2020.

The construction and building materials sector will be the industry with the lowest profit margin and its profits could plummet by 155 percent from last year.

The tourism and entertainment sector could see net income decline by more than 100 percent. Budget carrier Vietjet for instance expects pre-tax profit to fall by 98 percent to VND100 billion ($4.3 million) with international flights remaining suspended for more than three months.

Petroleum companies expect profit after tax to slip by 59 percent.

However, businesses in the pharmaceuticals, real estate and food and beverages sectors will enjoy similar profit growth as in 2019.

Also bucking the downward trend, basic materials, information technology and telecommunications will maintain double-digit profit growth this year.

According to FiinGroup, chemical companies will be among the biggest beneficiaries of supply chain breakdown, especially from China.

The sector expects profit growth of nearly 13 percent led by three enterprises, Duc Giang Chemicals Group JSC, Petrovietnam Fertilizer and Chemicals Corporation and Loc Troi Group.

This will be the first time in nine years that non-financial sectors will see profits decrease.

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