“White gold” businesses return to growth period

Once known as “white gold”, rubber prices have been low for many years, causing businesses to suffer. A sharp price increase in the third quarter has caused revenue for rubber businesses to increase, and they have reported sharp increases in profits.

Catching the price wave in the third quarter, businesses make "warm" profits

Dak Lak Rubber Investment Joint Stock Company (DRI) has just announced its financial report for the third quarter of 2024 with strong business growth results.   Specifically, net revenue in the third quarter of this year reached VND143 billion, up 53% over the same period last year. Increased financial revenue while financial expenses decreased rapidly was also the driving force behind the increase in corporate profits.

At the end of the third quarter, DRI's after-tax profit reached VND41.7 billion, 4 times higher than the third quarter of 2023, this is DRI's largest quarterly profit since 2018. In the first 9 months, the company achieved VND86 billion in pre-tax profit and VND72.3 billion in after-tax profit, currently exceeding the annual profit plan.  

Explaining this result, DRI said that in the third quarter, the selling price of rubber latex increased, and at the same time, the company also had additional revenue from durian, causing revenue and profit to grow.  

The increase in rubber prices in the third quarter is also a common joy for rubber businesses - once considered "white gold" by the people of the Central Highlands during the period of high economic value.

For many years, the sluggish rubber price has forced many businesses in the industry to reduce the scale of rubber plantations and expand into other fields to survive. However, up to now, businesses that are still attached to this raw material are recording good growth results in the third quarter as the prospect of rubber prices continues to trend upward.

At the end of September 2024, the prices of RSS3 and TSR20 rubber in the international market increased by 83% and 55% respectively over the same period, due to extreme weather developments. This has positively supported Vietnam's rubber export prices, with the average export price in September reaching 1,697 USD/ton, up 30% over the same period, and the selling price in the first 9 months of 2024 reaching 1,588 USD/ton, up 19%. As a result, Vietnam's total rubber export turnover in the first 9 months increased by 12% despite a 6% decrease in export volume.  

On the stock exchange, listed rubber companies have also reported significant profit growth.  

Phuoc Hoa Rubber Joint Stock Company (PHR) has just reported a profit after tax in the third quarter of 2024 of VND 32.5 billion, a sharp increase compared to the profit of more than VND 700 million in the same period last year. During the period, net revenue reached VND 317.7 billion, an increase of 12%. PHR also said that the profit increased thanks to the increase in latex selling price during the period, pushing gross profit up by VND 13.5 billion. In addition, PHR also recorded dividends from Geruco Song Con Hydropower Joint Stock Company.  

At Tay Ninh Rubber Corporation (TRC), net revenue in the third quarter increased by 28% along with good growth in financial revenue and other profits, resulting in a profit after tax of VND73 billion, more than 5 times higher than the same period last year. This is TRC's largest quarterly profit since 2024.  

Accumulated in the first 9 months of 2024, TRC achieved 101 billion VND in profit after tax (in the same period of 2023, the profit was more than 20 billion), surpassing the previous profit expectation of the company's board of directors of 70.5 billion VND for the whole year of 2024.  

Rubber businesses' profits increase sharply in the third quarter of 2024

Does the joy last?

Analysts at MBS said that Vietnam's rubber export prices will remain high until the end of the year due to a shortage of supply, increased demand after China implemented many policies to support the economy, and a decrease in rubber acreage due to the trend of converting rubber land.

The Association of Natural Rubber Producing Countries (ANRPC) has continued to raise its forecast for a natural rubber supply shortage this year. In 2024, global rubber supply is forecast to grow at a low rate of 0.4% due to unfavorable climatic conditions during the El Nino-La Nina transition and widespread leaf fall disease that negatively impacts rubber production and quality. In addition, rubber growers in many countries such as Thailand, Indonesia and Malaysia are not ready to expand their planting areas again.  

Meanwhile, global rubber demand will increase sharply by 2.3% thanks to the recovery of consumption demand in China as the country is implementing many policies to support economic growth. Major producing countries are converting rubber land to other purposes, which will support rubber prices to increase in the long term.

At the same time, crude oil prices have an indirect impact on natural rubber prices through synthetic rubber prices as crude oil is the raw material for synthetic rubber production. According to the US Energy Information Administration (EIA), oil prices are forecast to reach $83-84 per barrel in 2024-25 due to escalating instability in the Middle East.

However, this is also a risk factor that can cause rubber prices to reverse and decrease. Falling oil prices will cause rubber prices to decrease. Declining purchasing power from China will also cause rubber prices to reverse, greatly affecting businesses in the industry.

Source: https://baodautu.vn/doanh-nghiep-vang-trang-quay-lai-thoi-ky-tang-truong-d228574.html