Mixed profit targets for rubber companies despite price hikes
VIETNAM, May 4 –
Southern Rubber Industry Joint Stock Company (CSM) reports pre-tax profit at VND 101 billion, up 83% from 2021. — Photo courtesy of the company
HÀ NỘI — Global synthetic and natural rubber prices are on an upward trend, but not all companies in the sector are confident enough to set higher profit targets for this year.
Compared to the beginning of April, the price of this item has increased by 9%. Trading Economics also predicts that the rise in rubber prices will not stop until the end of the first quarter of 2023 and could reach 310.84 yen per kilo.
The price of crude oil in the world market has been rising lately, driving up the price of synthetic rubber – a petroleum product.
Rubber supplies have also been affected after the Organization of the Petroleum Exporting Countries (OPEC) said the world would not be able to replace around seven million barrels of oil and other liquids lost per day in Russia.
On April 18, 2022, benchmark US crude oil for June delivery was $113.2 per barrel and New York main contract, light sweet crude oil for May delivery, was $107.93 per barrel .
The price of natural rubber is also supported by global demand in 2022, which is expected to increase by 1.2% compared to 2021, to reach 14.2 million tonnes.
According to the General Directorate of Customs, in the first three months of 2022, rubber exports reached 406,800 tons, worth $715.39 million, up 0.3% in volume and 6 .2% in value compared to the same period of 2021.
The price trend is expected to increase in the coming months due to the seasonal shortage of supply, according to forecasts from the Việt Nam Rubber Association,
In addition to favorable market factors, the natural rubber industry is also experiencing certain pressures. Shortage of containers, high transportation costs and slow customs clearance will affect the demand for rubber.
After a year of failure to complete the annual plan, the Southern Rubber Industry Joint Stock Company (CSM) has established a business plan for 2022 with strong growth. CSM expects revenue to reach VNĐ4.95 trillion, a slight increase of 2% from the same period last year, but pre-tax profit is expected to reach VNĐ101 billion, up by 83% compared to 2021.
To achieve the goal, CSM officials said the company will maintain production to meet market demand, including both domestic and export, while increasing labor productivity for existing product groups, especially investing in small equipment to complete a number of stages in the production line of motorcycle tires, motorcycle inner tubes, bias tires and auto inner tubes.
Phước Hòa Rubber Joint Stock Company (PHR) is also setting a positive growth target this year with a revenue target of over VNĐ2.25 trillion and after-tax profit of VNĐ744 billion, up 16 % and 56% respectively compared to 2021.
Meanwhile, DakLak Rubber Investment JSC (DRI) is targeting total revenue of VNĐ599.6 billion in 2022, a slight increase from 2021, but profit after tax is expected to decline by 5.7% to 79.2 billion VND.
DRI Board Chairman Nguyễn Viết Tượng said that DRI manages an area of more than 8,800 hectares of rubber plantations in Laos with loans mostly in Lao kip. At the end of 2021, DRI’s total debt was over VNĐ256 billion, so the company would be at risk when it comes to exchange rates. If the kip depreciates, DRI’s revenue will also be affected. In addition, logistics costs will become high due to the sharp increase in raw material prices, which is also a disadvantage for DRI.
Đà Nẵng Rubber Joint Stock Company (DRC) also expects revenue in 2022 to decline slightly to VN4.4 trillion and profit after tax to decline by 12% to VN256 billion from a year earlier.
DRC said it still faces labor shortages at certain stages of production due to the COVID-19 pandemic; empty containers and high rental prices; and high transport costs which greatly increase the purchase price of raw materials. In particular, the conflict between Russia and Ukraine has led to higher oil prices, pushing up the prices of raw materials and goods, and the DRC’s import and export activities to these two markets have also been disrupted.
This year, DRC will focus on products that are the company’s strengths in the domestic market to improve production and business efficiency, such as off-road tires (OTR) and construction tires. The DRC’s objective is to cover all segments of the domestic market as well as to increase sales opportunities in export markets.
Positive first quarter
Many rubber companies recorded positive results in the first quarter compared to the previous year.
In the first quarter, thanks to a sharp increase in the selling price of finished products compared to 2021, DakLak Rubber Investment JSC (DRI) recorded net sales of VN 134 billion, up 8%, during of which revenue from finished rubber products reached VN 130 0.6 billion, the rest came from bananas and cashew nuts.
The company’s after-tax profit was VNĐ20.8 billion, up 27% year-on-year. Thanks to the results obtained, DRI achieved 22.3% of the revenue objective for the year and 26% of the profit objective.
Phước Hòa Rubber Joint Stock Company (PHR) said that in the first quarter of this year, the parent company recorded net sales of VNĐ302.6 billion, up 25% from the same period. in 2021, but profit after tax reached VNĐ240 billion. , 11.3 times higher than the same period last year and achieved 33% of the annual plan.
Đà Nẵng Rubber Joint Stock Company (DRC) achieved net sales of 1.28 trillion VN in the first quarter, pre-tax profit of 81.7 billion VN, up 40.6% and more by 3%, respectively. At the beginning of the second quarter, the company established a business plan similar to that of the first quarter, with net sales of 1,250 billion dollars, pre-tax profit reaching 80 billion VNĐ. —VNS