Fertiliser businesses have recently reported lower earnings in the third quarter this year due to rising input costs and decreasing consumption.
PetroVietnam Fertiliser and Chemicals Corporation (DPM) recorded net revenue of nearly VNĐ5.4 trillion (US$230.9 million) in the first nine months of this year, down 22.6 per cent year-on-year.
Post-tax profit touched VNĐ152 billion, down 73 per cent year-on-year.
The company attributed the decline in earnings to poor weather and a sharp drop in consumption volume.
In the third quarter alone, DPM's post-tax profit fell 61 per cent year-on-year, reaching VNĐ60.5 billion.
In a recent report, Việt Capital Securities said DPM may cut its profit target by 17.3 per cent in 2019 and 6.6 per cent in 2020-23 due to lower profit from its NPK fertiliser manufacturing plant.
Meanwhile Bình Điền Fertiliser JSC (BFC) reported revenue of VNĐ4.56 trillion, post-tax profit of VNĐ55.4 billion, down 8.8 per cent and 72.7 per cent, respectively, compared to the same period of 2018.
BFC said in the third quarter, Việt Nam's agricultural sector had been harmed by the bad weather conditions, plummeting agricultural prices and competition from imported fertiliser.
This drove BFC’s consumption volume down in the quarter.
To maintain market share, BFC had not increased selling prices while input material prices had risen, leading to gross profit in the first nine months falling by 25 per cent over the same period last year. These factors led to a sharp drop in after-tax profit.
The Southern Fertiliser JSC (SFG) reported a loss of VNĐ8.9 billion in nine months. In the third quarter, the company suffered a loss of VNĐ4.3 billion.
SFG said its third-quarter consumption volume was much lower than the same period last year, leading to a 19 per cent decrease in sales of goods and services, a 45 per cent drop in gross profit, which reached VNĐ18.1 billion.
SFG’s financial revenue fell 86 per cent compared to the same period last year, mainly due to a decrease in deposit interest.
Rising input costs
PetroVietnam Cà Mau Fertiliser JSC (DCM) saw a rise in revenue but a drop in profit. Its nine-month net revenue reached VNĐ4.95 trillion, up 6 per cent year-on-year and post-tax profit touched VNĐ308 billion, down 45 per cent year-on-year.
According to DCM, in addition to a slowing fertiliser consumption market, the company faced the problems of rising raw material prices, which made gross profit margin decline sharply.
Since the beginning of this year, the costs of raw materials increased by 71 per cent to VNĐ2.4 trillion. Gross profit margin dropped sharply, from 26 per cent in the third quarter of last year to 8 per cent this year.
DCM is working to find new markets and has exported 75,000 tonnes of fertiliser to countries in South Asia.