Dividend Payments Delayed Amid Economic Woes

PVC Petro Capital & Infrastructure Investment Company (PTL) has delayed the 2011 dividend payment to June 2013. This is the third extension of the enterprise while investors had registered to receive the dividend last December and payment ratio was only 4% in cash.



The enterprise has explained the same reason for the three extensions, saying that clients have failed to pay debts as scheduled and it cannot arrange capital for the



dividend payments.



However, the enterprise has reported gloomy results in its financial statements given difficulties in property trading. Specifically, PTL obtained under VND500 million in profit in the first quarter and incurred a loss of VND20 billion in the second quarter while stockpile amounted to over VND1.5 trillion as of the end of the first half of this year.



Someco Song Da Company (MEC) is also in the same plight, delaying the 2010 dividend payment plan at the 15% ratio three times. The enterprise blamed customers’ late debt payments as the cause of the first two late payments but at the third extension, MEC pointed out difficulties of unrecoverable debts owed by construction project investors.



The boards of directors of other enterprises have sought suggestions of shareholders to delay paying out dividends and save capital for production and business activities. Even large real estate companies such as Hoang Anh Gia Lai and Thu Duc House have decided to delay 2011 dividend payments for shareholders.



Meanwhile, some listed enterprises have offered shareholders big dividends, including CNG Vietnam Company with a dividend payment of 60% in cash and 10% in stock in 2011. This month, the enterprise has advanced the 2012 dividend for shareholders at 15%.



Le Dat Chi, head of the Financial Department of the HCMC University of Economics, said that investors do not merely look at dividends to make investment decisions. They consider prospects of the enterprises, profitability and development capability.



Before paying dividends, enterprises have to consider strategic and long-term factors of its business and financial environment, inflation and interest rates to continue raising corporate values. Therefore, as the capital market still has many difficulties, it is normal for enterprises to retain profits and maintain their operations.



However, investors will incur losses if enterprises delay dividend payments several times after closing the list of shareholders a long time ago, Chi said.