Fertilizer prices have fallen sharply compared to the same period last year, causing large businesses in the industry to report declining profits in the third quarter, quite different from the previous peak.
After 11 consecutive quarters reporting profits of hundreds of billions to thousands of billions of VND, Ca Mau Petroleum Fertilizer Joint Stock Company (Dam Ca Mau - DCM) recorded after-tax profit below this level for the first time, reaching 74 billion VND, only about 10% compared to the same period last year and the lowest level in the past four years.
Similarly, the business results of Ha Bac Fertilizer and Chemical Joint Stock Company (DHB) also plummeted after experiencing three consecutive quarters of losses. DHB lost about VND309 billion this period, while in the same period it made a profit of VND347 billion. Accumulated after-tax profit since the beginning of the year has been negative by nearly VND790 billion.
Not only pure fertilizer companies, but also chemical businesses have recorded less positive results than before. Duc Giang Chemical Group (DGC) has just reported a third-quarter profit of more than VND800 billion, down nearly half compared to the same period in 2022. Previously, this business had made a profit of thousands of billions of VND in five consecutive quarters (from Q4/2021 to Q4/2022).
The lower-than-expected business results of the last quarter have caused the prices of many fertilizer stocks to fall sharply. In the last three sessions up to October 25, DCM has lost more than 10% of its market value. DGC has fluctuated continuously but has also decreased by about 8.5% in the past week. Even though Phu My Fertilizer has not announced its business results, its stock price has been affected, falling more than 7% in the last three sessions.
The sharp drop in selling prices is the main reason for the fertilizer industry's poor profit prospects . Statistics from SSI Research show that urea prices bottomed out in June, fluctuating between VND9,000 and VND10,000 per kilogram and continued to move sideways in July. Ha Bac Fertilizer said that the average selling price of its urea products in the third quarter decreased by 36% compared to the same period in 2022.
DGC recorded a price drop due to the domestic and international market downturn. This caused revenue from major chemicals to decrease by nearly 40%, and from fertilizers by 14%. Similarly, according to Ca Mau Fertilizer, consumption output increased but fertilizer prices fell sharply, severely affecting revenue.
According to statistics from the Plant Protection Department in September, the price of urea fertilizer was around VND9,900-11,200 per kilogram. This figure is down 32-45% compared to the same period last year, and compared to the record set in April 2022, this price is 50-60% lower. The prices of DAP, potassium and other fertilizers are also lower than a year ago.
Urea prices bottomed out and moved sideways in June-July, starting to increase from August 2023. Source: SSI Research
However, fertilizer prices are showing positive changes after China's ban on urea exports. By the end of September, urea prices had increased by over 10% after just one month and by 24-30% compared to July. Other types of fertilizers also increased by VND300-800 per kilogram. In addition to the influence of the world market, prices of these products are also supported by the early start of the winter-spring crop and forecasts of increased rice acreage and some agricultural products, pushing up demand for fertilizer and prices.
Forecasting that fertilizer prices will increase from the last quarter of the year, securities companies have expressed positive views on the fact that corporate profits will soon improve. However, according to experts, fertilizer prices will hardly increase "exponentially" when domestic and international supply is not too tight.
Siddhartha
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