The Covid-19 pandemic has temporarily passed like a flash flood, sweeping away accumulations in years of several families and enterprises. It left impacts on all aspects of socio-economic life globally. The world has never experienced such a terrible pandemic that left a huge impact on the world.
In the early days of May 2020, when the pandemic has temporarily passed in Vietnam, the Government allowed people and enterprises to resume their normal daily activities. It is also the time for PVOIL to assess losses and achievements during the past four months when it deployed measures to fight against the virus. The corporation has been building production scenarios for the coming months.The Covid-19 pandemic had a double whammy on PVOIL. Besides the falling prices of crude oil and petroleum products in the domestic market, the demand for petroleum in the local market also plummeted due to the coronavirus outbreak.Since the beginning of the year, the domestic retail prices of petroleum has been adjusted down for 8 consecutive times, from more than VND 20,000 per liter of gasoline in early February to around VND 10,000 per liter currently. Domestic retail prices dropped to a 13-year low.The retail price has fallen sharply by 50% since after the Lunar New Year holiday meanwhile, PVOIL had to maintain the inventory in accordance with regulation. The corporation had to purchase petroleum at high prices and sell it out at low prices. In addition to a 20% decline in business revenue, PVOIL suffered four-month consolidated after-tax losses at VND 435 billion.The amount is large. However, it is only about 50% losses of PVOIL’s peer enterprises in the market had to suffer. It can be said that PVOIL has successfully minimized the damage caused by the Covid-19 pandemic.
In order to minimize the losses, PVOIL has applied all measures while operating the business to limit the negative impact of the adverse business conditions. PVOIL strictly controlled inventory with flexible measures in creating sources, negotiating promptly with suppliers to reduce or extend the receiving schedule.At the same time, PVOIL encouraged business units to quickly push selling products to the market and optimize business efficiency in all stages includes preparation, transportation, and storage.
With the motto of "tightening belt", PVOIL has implemented measures to reduce costs by cutting expenses that are not directly related to production and business. In particular, all leaders and employees of the corporation agreed to reduce the monthly salary by 25% to share difficulties with the company. After 4 months, the corporation saved 100 billion VND, equivalent to 24% of the total cost, beating expectation by 16%.
In addition to limiting losses at the lowest level, PVOIL has been successful in maintaining jobs and incomes for employees by quickly implementing the remote working regime, even before the government announced the social distancing campaign.
No employee of PVOIL lost their jobs due to the pandemic. This is something that not every business can do. Some large companies had to leave their employees unpaid or even laid off.
Reviewing and updating the current situation of the Covid-19 pandemic, PVOIL has planned two scenarios to continue it's business and production:
In scenario 1, the epidemic is controlled in May and the domestic economy gradually recovers from the end of June, PVOIL sale output in the first 4 months decreases by 15%, and 10% for the whole year of 2020. The average crude oil price in the first 4 months is 42.3 USD per barrel and in the last 8 months is over 35 USD per barrel.
In scenario 2, the epidemic broke out again after the reopening of trade, and the Government is forced to continue to apply strict social isolation measures while oil prices recovered slowly at a low level. Corporation’s sales output in the first 4 months decreased by 15% and the whole year of 2020 output drops by 18%. The average crude oil price in the first 4 months is 42.3 USD per barrel and oil price in the remaining 8 months is below 30 USD per barrel.
Based on that basis, PVOIL President and CEO Cao Hoai Duong urged entire employees to work 2 or 3 times harder to compensate for the previous losses. Staffers were encouraged to lay efforts for overcoming difficulties in the future.
Employees were asked to show responsibilities to the existence and development of the corporation by saving costs, working harder, or being more creative, effective at work. In this way, PVOIL could continue to control damage at the lowest level, taking the opportunity to firmly overcome the pandemic.
PVOIL President and CEO Cao Hoai Duong speaks at the four-month business review conference
Leaders and employees of the corporation participated in the conference