Meagre profits for some lead to longer-term hopes

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Vietnam witnessed a growth of import-export activities in the first four months of 2021, hitting a 10-year record high despite the pandemic, but profits have been eaten away by high logistics and raw material costs.
1543 p4 meagre profits for some lead to longer term hopes
Meagre profits for some lead to longer-term hopes, illustration photo

One of the world’s largest producers of basa fish, Vinh Hoan JSC, saw its sales rise in all its major markets in the first quarter of the year, with gross profits hitting $11.8 million, up nearly 27 per cent on-year. However, it posted a 14-per-cent loss in profit after tax despite the gross profit gain.

Company chairman Tran Le Khanh explained that the US market’s consumption is focused on restaurants, while in Europe consumption occurs mostly in supermarkets. Therefore, as restaurants gradually reopen in the US, so do exports. However, Vinh Hoan reported that its profit only amounted to $5.7 million.

According to the General Statistics Office (GSO), Vietnam’s exports reached an on-year increase of nearly 5 per cent to an estimated $103.9 billion in the first four months of this year, in which domestic companies earned $25.76 billion, rising 12.8 per cent on-year and making up 24.8 per cent of the country’s total export earnings. Meanwhile, exports of foreign-invested firms hit $78.14 billion, up 34.4 per cent, taking up 75.2 per cent of Vietnam’s total export turnover.

However, the high costs of logistics due to the shortage of shipping containers and other factors troubles exporting businesses in Vietnam.

The PAN Group reported that its shrimp exports, although seeing revenue increase by 36 per cent, only cashed in for an after-tax profit of $1.34 million, a decrease of 23 per cent on-year. The group expressed concerns about the increase in transportation costs – the main input cost of many enterprises.

Meanwhile, general director of Song Hong Garment JSC Bui Viet Quang said that his company plans to return to growth on 2019 levels this year, based on the recovery of the company’s key customer segments.

According to the latest GSO data, the price of raw materials, fuels, and other means of production in April increased by 0.37 per cent over the previous month and by 4.47 per cent on year. For the agro-forestry-fishery sector, the latter’s increase even amounted to 7.82 per cent. Other sectors like industrial production and construction saw increases of 4.95 and 1.95 per cent, respectively.

According to Ministry of Industry and Trade, amid the pandemic, the lack of empty containers, increasing shipping rates, and the incident at the Suez Canal and related rising transportation costs, Vietnam’s import-export activities since the beginning of the year recorded positive results. However, these factors also mean that profits for many exporting businesses remain meagre.

Nevertheless, equal growth in important export industries like electronics, textiles, machinery, and agriculture in major markets such as the United States, China, the EU, South Korea, Japan, and ASEAN is forecast and may promise higher profits in the long run.

By Phuong Thu

Nguồn: Vietnam Investment Review

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