Agricultural machinery major VEAM banks on term deposits

Financial revenue was the main bright spot for the state-owned Vietnam Engine and Agricultural Machinery Corporation (VEAM) in 2023.

The corporation, registered on the Unlisted Public Companies Market (UPCoM) as VEA, deposited nearly VND13,000 billion ($531.4 million) with various banks for varying terms. Its term deposits accounted for nearly 48% of its total assets.

VEAM’s board of directors have passed a series of resolutions approving deposit contracts with SeABank, with the total amount of 12-month term deposits reaching VND2,010 billion ($82.17 million).

The board of directors assigned the general director to negotiate, sign and implement deposit contracts with banks, ensuring safety and high efficiency. Nguyen Thi Nga, a board member of VEAM, is the standing vice chairwoman of SeABank.

According to its consolidated financial statement for the fourth quarter of 2023, at the end of last year, VEAM had VND12,913 billion ($527.9 million) in deposits, an increase of more than VND300 billion ($12.26 million) compared to the beginning of the year.

The company recorded VND2,622 billion ($107.2 million) in term deposit with SeABank, an increase of VND1,154 billion compared to the beginning of the year. It also placed more than VND5,471 billion with BIDV, VND1,955 billion with VietinBank, and VND1,089 billion with Agribank.

In 2023, the corporation gained VND6,233 billion (254.8 million) in net profit, down 18% compared to 2022.

It said that in a difficult economic context, demand for motorbikes and cars decreased, as did revenue from its main business and profits collected from joint ventures both decreased.

Net revenue and profit from VEAM's joint ventures and associates both dropped 19% to VND3,942 billion ($161 million) and VND5,639 billion, respectively.

Of its joint ventures and associates, Honda Vietnam made the largest profit contribution, followed by Toyota Motor Vietnam and Ford Vietnam Limited.

VEAM currently holds a 30% stake in Honda Vietnam, 20% in Toyota Motor Vietnam, and 25% in Ford Vietnam Limited, three leading automakers in the country.

One bright spot in VEAM's business results was that financial revenue increased from VND818 billion to VND1,205 billion ($49.26 million), mainly because of increased bank deposit interest.

The company's leadership has assessed that there will be many difficulties and challenges this year. Therefore, the parent company VEAM and its subsidiaries and affiliates develop plans with the goal of maintaining stable and sustainable operations.

Industrial production value is expected to rise 7%, while total revenue is targeted to increase 6% against the actuall 2023 figure.

The Ministry of Industry and Trade, which has an 88.5% stake in VEAM, has asked the corporation to implement several solutions to implement its 2024 plan.

Under this plan, VEAM will have to complete its restructuring project, divesting capital from companies that have been operating inefficiently as well as areas not in line with its future development orientation.

The company will also address the issue of cross-ownership involving those that VEAM has contributed capital to and focusing resources on firms with suitable business lines.

It will focus on becoming more competitive in agricultural machine manufacturing and supporting industries, seeking new markets and partners.