Dung Quat shipyard restructuring to help restore Vietnam’s shipbuilding industry

Restructuring Dung Quat Shipyard (DQS), a subsidiary of state-owned Petrovietnam, will improve the company’s financial situation, enhance its competitiveness and help restore Vietnam’s shipbuilding industry, Quang Ngai province authorities say.

The assertion is mentioned in a written report on the restructuring plan presented by the People’s Committee of the central province of Quang Ngai, where DQS is located, during a working session with the Ministry of Industry and Trade (MoIT) last week.

The report said that the restructuring will create more jobs for workers, ensure security factors and boost production capacity.

It said the restructuring also aimed to promote Vietnam’s shipbuilding industry in line with the development plan for the Dung Quat Economic Zone and the strategy for sustainable development of Vietnam's marine economy until 2030, with vision until 2045, it adds.

DQS's business performance in the 2019-2023 five-year period improved significantly before the preceding five years (2016-2018) with revenues increasing every year, the report noted.

Its 2022 revenues of VND757 billion ($30.17 million) was almost double (90%) that of 2021 (VND396 billion) and up 80% over 2018 (VND421 billion). Last year’s revenue of VND790 billion was 4% higher year-on-year.

Consolidated after-tax profits in the 2019-2023 period was VND65 billion ($2.59 million) and EBITDA (earnings before interest, taxes, depreciation and amortization) was VND353 billion ($14.07 million).

This showed that DQS made a profit on variable costs and partially offset expenses, the report said.

Earlier, in March 2024, then Deputy Prime Minister Le Minh Khai chaired a meeting of the firm’s steering committee to fix shortcomings and weaknesses in some projects as well as development plans for DQS.

According to the Commission for the Management of State Capital at Enterprises (CMSC), Petrovietnam has sketched two scenarios for the production and business results of DQS in the 2023-2035 period, based on projected market demand and the shipyard's internal capacity.

In the first scenario, the company is expected to enjoy annual revenues and after-tax profits of around VND1.31 trillion ($53 million) and VND64 billion ($2.55 million), respectively, after making additional investments in building wharves.

In the second, more optimistic scenario, the corresponding figures are estimated at VND1.49 trillion ($59.37 million) and VND65 billion ($2.59 million), as the firm invests more in building piers and auxiliary items as also ship dismantling works.

DQS was established on February 20, 2006 as a member of Vietnam Shipbuilding Industry Corporation.

Its management was transferred to state-owned Petrovietnam on July 1, 2010, as part of implementing the government's plan to restructure the Vietnam Shipbuilding Industry Corporation.