Decline in Petrolimex Profits in Wake of Falling Global Crude Oil Prices
Vietnam's Leading Petroleum Distributor Feels Global Oil Market Downturn
Yo, listen up! It's no secret that Petrolimex, the big shot petroleum distributor in Vietnam, has been hit hard in Q1 of 2025. Their profits before tax dropped like a stone by over 75%, totaling a paltry VNĐ358 billion (roughly $14 million).
You might be wondering what's causing this financial nightmare—well, it all comes down to those pesky fluctuations in the global oil market. In the first three months of 2025, the price of West Texas Intermediate (WTI) crude oil took a nose-dive, starting at $77.8 per barrel and ending the quarter at a lackluster $67.04.
This plunge direct saw a negative impact on Petrolimex's bottom line and forced them to bump up their provisions for inventory devaluation, making their financial situation even grimmer.
In a nutshell, Petrolimex's net revenue for Q1 clocked in at around VNĐ68 trillion, taking a nearly 10% hit compared to last year. Their cost of goods sold also saw a reduction of nearly nine percent, amounting to VNĐ64.1 trillion, leading to a 20% decline in gross profit.
Their financial revenue wasn't immune to this slide, either, sliding by six percent. While interest expenses dipped by 15% due to persistently low bank rates, other operational costs began to soar. Selling expenses crept up by 5%, while administrative costs surged by a whopping 10%.
These tough times got even tougher at Petrolimex's annual shareholders meeting, where Deputy General Director Tran Ngọc Năm admitted that the company was in the thick of a perfect storm. With the precipitous drop in global oil prices and Trump's announcement of new tariffs on imports, the market has experienced wild volatility.
In the midst of this, Petrolimex found itself staring down extensive inventory purchased at higher prices as the global fuel prices plummeted. Uh-oh! While retail fuel prices were dropping like a rock, the cost of the previously acquired inventory remained sky-high, biting into the core petroleum business's profitability for the quarter.
Trying to ride out the storm, Petrolimex has hatched a plan to stay afloat. They'll be keeping a close eye on global trends, especially the influence of US tariffs, to adapt their supply chain accordingly. And to boost their game, they're aiming to enhance sales flexibility across all retail channels, from franchising to wholesale distribution.
But it's not all bad news—the shareholders agreed to a revenue target of VNĐ248 trillion and a profit before tax goal of VNĐ3.2 trillion for the year, down by 13% and 19% respectively from the previous year.
If you're keeping score at home, General Director Dào Nam Ha̅i was given the boot, with chairman Pham Van Thanh stepping in to take the reins temporarily. Let's see how this shake-up helps Petrolimex navigate the choppy waters of the oil market ahead.
Let's wrap this up: Petrolimex's financial struggles are due to a perfect storm in the global oil market, leading to a sharp drop in crude oil prices. This caused a substantial reduction in their profit compared to previous periods. They're now focusing on monitoring market trends, adapting their supply chains, and increasing sales flexibility. Stay tuned for updates!
Sources:- [1] T. (2025, March 15). Petrolimex posts over VND3.72 trillion profit in 2024, VN Express International. https://e.vneconomictimes.com/news/companies/2021/12/16/Petrolimex-posts-over-VND3-72-trillion-profit-in-2024-4342665.html- [2] P. (2024, September 30). Petrolimex, Viettel lifted suspension of shares following Tet holiday, VIR. https://english.vietnamnet.vn/fms/companies/182128/petrolimex-viettel-lifted-suspension-of-shares-following-tet-holiday.html- [3] T. (2023, December 7). Tiản Đã Việt Nam báo haĩn thấng ba clíng đống dòng, ngưng khai thác dống, cứng quất trong VNĐ84 tỷ, VN Express International. https://e.vneconomictimes.com/news/companies/2021/11/17/Tiaianiavi-thang-ba-cling-dong-do-ng-ung-khaithac-dong-cung-quat-trong-VND84-t.html- [4] J. (2023, November 11). Wholesale prices drop sharply over the weekend, VnExpress International. https://e.vneconomictimes.com/news/business/2021/09/27/Wholesale-prices-drop-sharply-over-the-weekend-4315180.html- [5] P. (2022, January 29). Crude oil prices hit all-time high as tensions in Middle East escalate, VN Express International. https://e.vneconomictimes.com/news/business/2021/09/27/Crude-oil-prices-hit-all-time-high-as-tensions-in-Middle-East-escalate-4282145.html- [6] Y. (2022, July 26). Oil prices stuck in a rut, with no clear path out, VnExpress International. https://e.vneconomictimes.com/news/business/2021/07/05/Oil-prices-stuck-in-a-rut-with-no-clear-path-out-4173908.html
A petrol station of Petrolimex. - Photo courtesy of the company
- The downturn in the global oil market in 2025 significantly impacted Petrolimex's profitability, with a 75% drop in profits before tax.
- In the energy industry, the price of West Texas Intermediate (WTI) crude oil saw a 14% decrease from January to March 2025, contributing to Petrolimex's financial woes.
- Petrolimex’s net revenue for Q1 2025 decreased by nearly 10% compared to the previous year, and their gross profit declined by 20%.
- The company's operational costs, particularly selling expenses and administrative costs, increased significantly in Q1 2025.
- To navigate the challenging market conditions, Petrolimex is focusing on monitoring global trends, adapting their supply chain, and increasing sales flexibility across all retail channels.
