Vietnam's coffee exports are at an all-time high, how do coffee businesses make profits and losses?

Coffee exports at unprecedented high, many businesses suffer losses

At the end of the 2023-2024 crop year, coffee export output decreased by 11.3% compared to the previous crop year, but revenue reached a record of more than 5.4 billion USD. Currently, coffee prices have cooled down compared to previous months but are still about 80% higher than the same period last year.

According to the General Department of Customs, in the first 9 months of the year, Vietnam's coffee exports reached 1.1 million tons, equivalent to a turnover value of more than 4.3 billion USD, down 11.7% in volume but up 38.7% in value compared to the same period last year.

Despite the decrease in output, thanks to the sharp increase in prices, coffee export turnover exceeded the 4.24 billion USD mark achieved in the whole year of 2023, setting a new record.

Thus, at the end of the 2023-2024 crop year (from October last year to September this year), Vietnam exported a total of 1.47 million tons of coffee, down 11.3% compared to the previous crop year.

However, the export value in the medium crop year still increased by 33%, to 5.42 billion USD - the highest in history, driven by export coffee prices that were nearly 50% higher than the previous crop year, reaching an average of 3,673 USD/ton.

In September alone, the average export price of coffee reached 5,469 USD/ton - the highest level ever, up 5.8% compared to the previous month and up 68.7% compared to the same period last year.

In the second quarter of 2024 alone, Thang Loi Coffee only achieved revenue of VND 99 billion, down 45% compared to the same period in 2023, but after-tax profit reached VND 19 billion, a sharp increase of 1,571%.

Despite record high coffee export turnover, the business situation of coffee enterprises is significantly different in the 2023-2024 crop year.

Among the profitable businesses is Thang Loi Coffee (code CFV), one of the largest coffee businesses in Dak Lak. In the first half of 2024, this business recorded a profit after tax of VND 29 billion, an increase of nearly VND 26 billion compared to last year, although net revenue decreased by VND 32 billion compared to the same period last year, reaching VND 265 billion.

In the second quarter of 2024 alone, Thang Loi Coffee only achieved revenue of VND99 billion, down 45% compared to the same period in 2023, but after-tax profit reached VND19 billion, a sharp increase of 1,571%. According to Thang Loi Coffee, the sharp increase in profit came from the sudden increase in domestic coffee prices. The company has focused on purchasing coffee before selling, while reducing costs, contributing to improving business efficiency.

Vietnam National Coffee Corporation (Vinacafe) is also a profitable enterprise. This enterprise said that in the first 9 months of 2024, Vinacafe's total consolidated revenue reached VND 1,579 billion; of which, the parent company reached VND 988 billion, equal to 107% compared to the same period last year. Consolidated profit reached VND 10.6 billion; of which, the parent company reached VND 4.6 billion. Total consolidated state budget payment reached VND 63 billion; of which, the parent company reached VND 13.5 billion.

Vinacafe carries out production and business tasks in the first 9 months of 2024 in the context of high coffee prices, bringing great opportunities for the Corporation.

At the end of the 2023-2024 crop year, coffee export output decreased by 11.3% compared to the previous crop year, but revenue reached a record of more than 5.4 billion USD.

In contrast to the number of profitable businesses, many coffee companies are falling into losses or having reduced profits. Vinacafé Bien Hoa (code VCF) is a company with increased revenue but decreased profits.

In the first 6 months of 2024, Vinacafé Bien Hoa's revenue reached VND 1,072 billion, an increase of VND 63 billion compared to the previous year. However, profit only reached VND 167 billion, a decrease of VND 8 billion compared to the same period. The main reason was explained as the sharp increase in input material costs, which could not compensate for the increase in sales.

Phuoc An Coffee Joint Stock Company (code CPA) is also a company with increased revenue but still losing money. Phuoc An Coffee recorded a total revenue of nearly 13 billion VND in the first half of 2024, an increase of 66% over the same period. However, the company still lost nearly 2 billion VND.

Gia Lai Coffee Joint Stock Company (stock code FGL) has no main revenue and is suffering heavy losses. Gia Lai Coffee reported a loss of nearly VND 14.3 billion in the first 6 months of 2024 after audit.

The main reason is that the company has not yet received revenue from green coffee beans, its main profit-generating product. The company's coffee harvest period only starts from October to December 2024, meaning that all of the previous crop's coffee will be sold in 2023.

In addition, high management and financial costs, plus other costs related to the destruction of ineffective orchards, have made the company's business situation even more difficult.

Petec Coffee Joint Stock Company (stock code PCF) also has plummeting revenue and low profits. In the first quarter of 2024, the company's revenue reached only 10 billion VND, compared to 105 billion VND in the same period last year. Profit after tax reached 37 million VND, a sharp decrease compared to 202 million VND in the same period. The company's shares are being put on warning status. The business results for the second and third quarters are not yet available.

Minh Khang Capital Trading Public Joint Stock Company (Code: CTP) also had a lackluster business performance in the first half of 2024. CTP recorded net revenue of nearly VND 709 million. The company lost VND 178 million after tax, while in the first 6 months of last year it made a profit of VND 274 million. As of June 30, CTP's total assets reached VND 152 billion, down more than VND 40 billion compared to the beginning of the year.

Coffee businesses still face dilemma

Mr. Luong Tuan Vu, General Director of Gia Cat Loi Goods Joint Stock Company, said that in fact, for many years now, whenever coffee prices fluctuate greatly, businesses have had difficulties and even gone bankrupt.

In the Central Highlands, in the past, harvested coffee was brought home for storage, but storing it at home was prone to mold because the warehouse did not meet standards, and theft made growers worried. Therefore, most people would consign the harvested coffee to large coffee businesses.

However, businesses that receive consignments from people have to worry about the problems of warehousing, transportation, supervision, and loss and decline in coffee quality. Storing coffee for a long time will result in losses due to many costs, and selling it will increase the price and there will be no money to compensate for the farmers' losses.

To find a solution to this problem, many businesses have had a headache. If they do not receive coffee from the people, they will not have any business. After receiving, they have to bear all kinds of costs and still have to find a good price to sell for profit.

It should be added that many businesses have used large financial leverage and borrowed from family and relatives. They just want to sell stably to make a profit on price differences, for example, buying coffee from people at 70 and selling it to traders at 71 and 72 to make a profit on the difference in buying and selling prices in the hope of sustainable development. But coffee prices are fluctuating every day.

When businesses use additional leverage by borrowing coffee from farmers to buy and sell at a higher price, the risk is extremely high.

When businesses use additional leverage by borrowing coffee from farmers to buy and sell at a higher price, the risk is extremely high.

Currently, both domestic and foreign coffee markets are very sensitive to changes in production. Vietnam's new crop is likely to continue to decline due to unfavorable weather factors.

Not only that, Vietnamese coffee exporters are currently struggling with financial pressure, product shortages and higher shipping costs, making them more cautious about taking new orders.

Coffee prices remain high, but stories about financial loans, transportation costs, product shortages, etc. continue to cause "headaches" for many coffee exporting businesses.

Mr. Le Duc Huy - General Director of Dak Lak 2/9 Import-Export Company Limited (Simexco DakLak) - shared that this year's crop, the company will reduce export output compared to last year by about 15% (from 115,000 tons as targeted to 100,000 tons).

Coffee prices are fluctuating, so businesses do not have enough money to buy at peak times, leading to the need to reduce business output. In particular, it is necessary to tighten the source of goods sold to manage risks and avoid economic losses. Only when there are enough goods will they sell to international partners. Moreover, in the 2024-2025 crop year, coffee in the area is likely to fail due to drought, so businesses are also very cautious in business activities...

Source: https://danviet.vn/xuat-khau-ca-phe-cua-viet-nam-cao-nhat-lich-su-doanh-nghiep-ca-phe-lam-an-lo-lai-the-nao-20241016121402317.htm