Fuel Surcharge Hikes Fail to Lift Viettel Post Profits Amid Rising Costs

Vietnamese logistics giant Viettel Post (VTP) reported a 25% year-on-year decrease in its second-quarter net profit, falling to VND 72.7 billion, despite a 9.8% rise in revenue to VND 5.47 trillion. The company implemented a 15% fuel surcharge from early April to mitigate the impact of rising fuel costs, but escalating expenses continued to erode profitability. According to its consolidated financial statements, Viettel Post's cost of goods sold increased by 10% to VND 5.17 trillion, leading to a 6.4% growth in gross profit to VND 294.7 billion. However, the gross profit margin slightly declined from 5.6% to 5.4%. A bright spot was the nearly doubled financial revenue to VND 44.8 billion, primarily driven by higher interest income from deposits and loans. Nevertheless, significant increases were observed across various expense categories, with financial expenses doubling to nearly VND 34 billion, selling expenses jumping 68% to VND 37 billion, and general and administrative expenses rising 24% to VND 169 billion. Viettel Post attributed the profit decline mainly to fluctuations in consumer prices and increased fuel costs. In response, the company decided to further adjust its fuel surcharges, introducing an additional 8% for normal delivery services and 12% for certain heavy parcel services starting July 29. For the first half of 2026, Viettel Post's revenue grew by 2% to VND 10.23 trillion, but its net profit dropped by 33% to VND 111.7 billion. The company has set a full-year target of VND 19.51 trillion in revenue and VND 399.7 billion in net profit. However, its profit achievement for the first half stands at only 28% of the annual target. In contrast, competitor EMS (CTCP Chuyển phát nhanh Bưu điện) reported more favorable results, with a 23% increase in revenue and a 156% surge in net profit for the second quarter, largely due to a significant reduction in general and administrative expenses. EMS's performance suggests that Viettel Post may have room for further cost management improvements. Viettel Post's total assets increased by 7.3% from the beginning of the year to VND 8.06 trillion. Cash and cash equivalents nearly tripled to over VND 1.001 trillion. However, inventory levels more than doubled to VND 355.3 billion, mainly due to a substantial increase in work-in-progress, particularly in construction costs for the Da Nang logistics center project. While Vietnam's economy continues to grow under its one-party system, global inflationary pressures and supply chain disruptions are posing significant challenges for domestic companies, especially in the logistics sector. Viettel Post's situation highlights the ongoing need for cost control and profitability maintenance amidst economic expansion. Source: The Saigon Times