A petrol station of Petrolimex. — Photo courtesy of the company

HÀ NỘI — Việt Nam’s leading petroleum distributor, Petrolimex, announced a staggering decline of more than 75 per cent in its profit before tax in the first quarter of 2025, which amounted to just over VNĐ358 billion (nearly US$14 million).

This sharp decrease compared to the same period in 2024 has raised concerns among investors and market analysts regarding the company's operational challenges. The significant drop in profit is primarily attributed to adverse conditions in the global oil market.

During the quarter, the price of West Texas Intermediate (WTI) crude oil plummeted from $77.8 per barrel at the beginning of the quarter to $67.04 by the end of the quarter. This decline directly impacted Petrolimex’s cost of goods sold and necessitated increased provisions for inventory devaluation, further straining its financial performance.

According to the financial report released by Petrolimex, the company’s net revenue for Q1 reached about VNĐ68 trillion, down nearly 10 per cent year-on-year. The cost of goods sold also saw a reduction of nearly nine per cent, totalling VNĐ64.1 trillion, which led to a gross profit decline of 20 per cent.

Financial revenue, primarily derived from interest on deposits, decreased by six per cent. Although interest expenses fell by 15 per cent due to persistently low bank rates, other operational costs have risen.

Selling expenses increased by 5 per cent, while administrative costs witnessed a 10 per cent hike.

At the recent annual shareholders' meeting, Petrolimex's deputy general director, Trần Ngọc Năm, said that the rapid decline in global oil prices, particularly following President Trump's announcement of new tariffs on imports, has created significant volatility in the market.

The price of fuel globally dropped sharply, at times exceeding 20 per cent. With regulations mandating companies to maintain a minimum inventory of 20 days, Petrolimex found itself in a precarious position, holding substantial inventory purchased at higher prices just as market prices fell.

He pointed out that while retail prices were dropping, the cost of previously acquired inventory remained high, severely affecting the core petroleum business's profitability for the quarter. Given the current geopolitical complexities and price fluctuations, Petrolimex anticipates that 2025 will be fraught with risks and challenges that are difficult to manage.

To navigate these challenges, the company is implementing a series of strategies, including closely monitoring global oil market trends, especially the impact of US tariffs, to adapt its supply chain accordingly. The company aims to enhance its sales flexibility across all retail channels, including franchising and wholesale distribution.

During the meeting, Petrolimex's shareholders approved a consolidated revenue target of VNĐ248 trillion and a profit before tax goal of VNĐ3.2 trillion for the year, which represents reductions of 13 per cent and 19 per cent, respectively, from the previous year's performance.

On Thursday, the company announced the temporary suspension of General Director Đào Nam Hải, effective immediately until further notice.

The decision, made by the Board of Directors in line with Ministry of Finance guidelines, appoints Chairman Phạm Văn Thanh to temporarily oversee the management of Petrolimex.

Hải, 51, has served as General Director since March 2022 and previously held roles as Deputy General Director and in leadership positions at PJICO and other Petrolimex affiliates.— BIZHUB/VNS