Shrimp industry faces many challenges, what does Minh Phu do to achieve record profit plan?

The shrimp industry continues to face many challenges...

In the first 5 months of this year, Vietnamese enterprises exported shrimp to 103 markets, bringing in 1.3 billion USD, up 7% over the same period last year. The slight increase in export turnover compared to the same period is a positive sign, however, the shrimp industry continues to face many challenges as the world economy shows no signs of recovery, inflation remains high, and the war has not ended.

With the US being the largest market for the shrimp industry, in the first 5 months of this year, Vietnam’s shrimp exports to the US reached 229 million USD, up only 1% over the same period. Shrimp exports to the US only increased sharply in January, while in February, April and May they decreased sharply.

In this market, inflation remains high, housing costs, gasoline, etc. are high. In addition, shipping costs have increased dramatically by 40% since May due to the war in the Middle East and China collecting empty containers to prepare for export to the US before the new tax deadline. Vietnamese shrimp also has to compete strongly on price with Ecuadorian, Indian, and Indonesian shrimp in the US market.

Demand for Vietnamese shrimp imports from the US may increase slightly in the third quarter of this year as importers increase purchases to serve year-end festival demand.

In the first five months of this year, Vietnamese enterprises exported shrimp to 103 markets, bringing in 1.3 billion USD, up 7% over the same period last year.

With the EU market - the next largest market, Vietnamese shrimp is facing stronger competition in the EU market. In the first 5 months of this year, Vietnam's shrimp exports to Europe reached 165 million USD, up 8% over the same period. Shrimp exports to the EU, after decreasing in February and March, recovered and increased again in April and May.

The Japanese market also has many forecasts showing that this market will only increase shrimp imports from September to serve the year-end demand. In the first 5 months of this year, Vietnam's shrimp exports to Japan reached 183 million USD, down 4% compared to the same period.

Finally, Vietnamese shrimp exports to China also show that prices will be more difficult. In the first 5 months of this year, Vietnamese shrimp exports to China & Hong Kong reached 260 million USD, up 21% over the same period. Exports to this market group gradually decreased from January to April. In May, there were signs of a sharp decrease. The main reason is that Vietnamese shrimp prices are higher than those of competing suppliers.

In the coming months until the end of the year, Ecuador, India and Indonesia will focus more on the Chinese market due to high US tariffs, so Vietnamese shrimp exported to China will have more difficulty in terms of price, especially whole tiger shrimp and whole whiteleg shrimp...

For South Korea, Vietnam’s shrimp exports to South Korea have yet to recover. In the first five months of this year, Vietnam’s shrimp exports to South Korea reached 124 million USD, down 9% over the same period. Slow consumption demand, high inflation, currency devaluation, and rising interest rates make it difficult for Vietnam’s shrimp exports to South Korea to recover.

Difficult market, what does 'Shrimp King' Minh Phu do to achieve record profit plan?

With the above difficult shrimp market, by the end of the first quarter of 2024, Minh Phu Seafood Corporation (UPCoM: MPC) had only achieved 0.7% of its annual profit projection, although it recorded a profit after tax of VND 7.2 billion, much better than the loss of more than VND 97.2 billion in the first quarter of 2023.

Minh Phu's consolidated financial statements for the first quarter.

Regarding the business situation in the first 6 months of the year, Mr. Le Van Quang - General Director of MPC shared on June 22 that it has not yet recorded positive results, and the implementation is still far from the plan (after-tax profit of VND 1,266 billion in 2024). Although production has increased, exports are still poor, affected by the US imposing high tariffs on China, causing China to "take" all ships and containers back to the country. This is expected to cool down by July, thereby helping to improve the company's export situation.

In 2024, Minh Phu plans to produce 60,000-70,000 tons of shrimp, with revenue of VND18,569 billion and after-tax profit of VND1,266 billion. This is a record high business target. The expected dividend payout ratio is from 50% to 70%. Thus, after a heavy loss in 2023, "shrimp king" Minh Phu expects to regain growth momentum and this is also the highest profit since 2008.

Sharing about MPC's difficult, ambitious plan and orientation, Mr. Le Van Quang said that MPC continues with the goal of developing the shrimp value chain towards a circular economy and a green economy on a digital platform.

Minh Phu has been digitizing the value chain and enabling traceability from hatcheries to farms, processing plants and distribution systems to consumers.

MPC's core strategy is that by 2030, the cost of Vietnamese raw shrimp will be equal to that of Ecuador and it has set out many solutions to achieve this goal.

At the same time, the enterprise will complete and promote shrimp seed production using MPBiO biotechnology (Minh Phu BiO) with the goal that by 2035 MPC will be self-sufficient in 50% of raw shrimp demand.

In addition to focusing on the main export market, the company is looking for more orders in new markets such as China, Japan, Korea, Australia, New Zealand...

In addition, Minh Phu also increased its domestic shrimp market share this year, aiming to increase it to 5-10%.

Mr. Le Van Quang - General Director of Minh Phu Group introduced whiteleg shrimp at Bach Hoa Xanh supermarket on March 26. Photo: Phuc Minh

In fact, the shrimp industry still has many limitations. That is, the source of raw materials continues to lack stability in terms of quality and price. Shrimp farmed in our country is currently difficult to compete due to low efficiency, high prices and businesses have to import raw materials for processing...

Although the shrimp industry is still facing uncertain growth, experts still hope that Vietnam's shrimp exports will still increase by 10-15%. Because the economic recovery of countries leads to a gradual recovery in consumption demand. Enterprises such as Minh Phu will promote deep processing products, market trade...

In addition to developing the domestic market, the US, and the EU, Minh Phu is targeting China, a country with more than 1 billion people, a huge consumption power, and a border with Vietnam to help avoid risks of long-distance shipping by sea. Minh Phu aims to increase sales to this potential market by 10%, then 20% and higher this year and the following years to try to complete the set profit target...

Source: https://danviet.vn/nganh-tom-doi-mat-voi-nhieu-thach-thuc-minh-phu-lam-gi-de-dat-ke-hoach-loi-nhuan-ky-luc-2024062121394909.htm