The selling price has not improved and the transportation cost has increased sharply since the end of April 2024 until now, causing the profits of pangasius exporting enterprises to continue to decline in the first half of 2024.
Profits still decline, despite revenue rebound
After a year of declining business results in 2023, the group of pangasius exporting enterprises has shown signs of recovery in the first 7 months of 2024. In particular, according to data from the Vietnam Association of Seafood Exporters and Producers (VASEP), in 7 months, the export value of pangasius reached nearly 1.09 billion USD, up 7.7% over the same period last year.
Previously, Agromonitor said that pangasius export turnover would recover in the first half of 2024 with support from increased output in all markets, most notably the US market. In particular, output grew, but selling prices remained low compared to the same period in all markets.
In fact, if we look closely at the business results reports for the first half of 2024 of pangasius production enterprises, the lack of improvement in selling prices and pressure on transportation costs are dragging down gross profit margins and net profits. The decline has not shown signs of improvement as freight rates remain high, especially on intercontinental shipping routes.
Vinh Hoan Joint Stock Company (code VHC), the leading pangasius exporter, recorded a 22.2% increase in revenue in the first half of 2024, to VND 6,073.5 billion, but profit decreased by 26.53%, to VND 483.6 billion. Of which, gross profit margin reached only 11.98%, net profit margin reached 7.96%, a record low compared to the period 2020-2023. In addition to the narrowing gross profit margin, Vinh Hoan also recorded a 55.95% increase in transportation costs over the same period, from VND 64.32 billion to VND 100.31 billion.
Explaining the continued decline in profits, Ms. Truong Thi Le Khanh, Chairwoman of Vinh Hoan's Board of Directors, said that it was due to the decrease in the selling price of pangasius products. Thus, Vinh Hoan's business performance in the first half of 2024 has decreased by nearly half compared to the most favorable year, 2022, and has continued to decline since 2023.
Similarly, businesses in the industry such as Nam Viet Joint Stock Company (code ANV) and IDI Multinational Investment and Development Joint Stock Company (code IDI) also experienced flat revenue, but due to narrowing gross and net profit margins, they still reported continued decline in net profit.
At Nam Viet, in the first half of 2024, revenue decreased slightly by 0.9% to VND 2,209.4 billion and profit after tax decreased by 16.7% to VND 34.41 billion. Of which, gross and net profit margins decreased by 11.1% (same period 11.3%) and 1.6% (same period 1.9%). Nam Viet further explained that transportation costs, after declining in the first quarter of 2024, jumped up to 91.45% in the second quarter, from VND 18.95 billion to VND 36.28 billion.
Meanwhile, in the first half of 2024, IDI recorded a slight decrease in revenue of 0.7%, to VND 3,564.71 billion, but profit decreased by 21%, to VND 28.87 billion. Of which, gross profit margin decreased to 7.68% (same period 8.34%) and net profit margin was 0.81% (same period 1.02%). The company further explained that, in addition to the narrowing gross profit margin, transportation costs in the first half of 2024 also increased by 39.8%, from VND 35.4 billion to VND 49.48 billion.
Expected to continue recovery momentum in the second half of 2024
Assessing the business situation of the pangasius export group, experts from Rong Viet Securities Company said that the outlook for the second half of 2024 focuses on increasing output thanks to pangasius prices being more competitive than other types of fish. Pangasius prices are expected to gradually increase in all markets thanks to the peak season, but the increase will not be strong due to the weak economies of the countries and the expectation of improvement in 2025 after the US Federal Reserve (Fed) is expected to cut interest rates in September.
Experts from SSI Securities Company also commented that importing enterprises have taken advantage of the low price period to accumulate output in the first half of 2024, when consumption is expected to recover in the second half of 2024. SSI Research expects consumption output to continue to grow in the second half of 2024, thanks to the period from August to November being the peak season for pangasius exports, along with expectations of a recovery in consumption in the US market.
It can be seen that although the selling price of pangasius remains low and is under pressure from high transportation costs, experts still expect a recovery in the second half of 2024 for pangasius exporting enterprises thanks to the peak season and the expectation of demand recovery in major consuming markets.
Source: https://baodautu.vn/trai-chieu-doanh-thu-va-loi-nhuan-cua-nhom-xuat-khau-ca-tra-d222304.html
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