Logo of Phnom Penh Post newspaper Phnom Penh Post - Many players in Vietnam rubber industry enjoying climb in earnings despite surging costs of materials

Many players in Vietnam rubber industry enjoying climb in earnings despite surging costs of materials

Content image - Phnom Penh Post
Inside a Da Nang Rubber Co (DRC) factory. The company has announced that second-quarter revenue surged 52 per cent to 1.2 trillion dong ($52 million). DRC

Many players in Vietnam rubber industry enjoying climb in earnings despite surging costs of materials

Many Vietnamese rubber companies have reported positive second-quarter profits despite the rising price of materials needed to produce the popular commodity.

The price of natural rubber has increased sharply since the end of last year and stayed high for the first half of this year. Rubber futures prices on the Tokyo exchange also maintained a high of around 230 yen ($2.10) per kg. This has cooled since the end of June to 211 yen per kg, but still up 32 per cent over the same period last year.

This development could be detrimental to the rubber tire business as rubber raw materials account for 70 per cent of the product’s cost. However, businesses in this industry still recorded very positive business results in the second quarter of this year thanks to an increase in consumption volume in both domestic and export markets.

According to the statistics of the Vietnam Automobile Manufacturers Association (Vama), automobile sales reached 150,481 units, up 40 per cent over the same period last year. Passenger cars, in particular, increased by 37 per cent, commercial vehicles rose by 48 per cent and specialised-purposes vehicles climbed by 68 per cent. In the second quarter alone, car sales reached 79,237 units, up 11 per cent compared to the previous quarter and up 58.4 per cent over the same period last year.

Da Nang Rubber Co (DRC) – a blue-chip on the Ho Chi Minh City Stock Exchange – has announced second-quarter revenue up 52 per cent to 1.2 trillion dong. Its post-tax profit was 2.2 times higher than the same period last year, reaching 106 billion dong. In six months, its revenue increased 31.3 per cent to 2.1 trillion dong and post-tax profit was 170 billion dong, double the same period last year. The gross profit margins increased from 14.8 per cent to 18.8 per cent in the second quarter and increased from 14.8 per cent to 18.6 per cent over six months.

According to SSI Research, DRC suffered from high raw material costs in the second quarter as natural rubber, synthetic rubber, chemicals, and black coal respectively increased by 26 per cent, 15 per cent, eight per cent and 25 per cent, compared to the previous quarter. However, sale volumes of bias tires still rose by 34 per cent and radial tires rose by 67 per cent. Corporate profit margins improved partly thanks to higher radial plant operating capacity and reduced depreciation expenses.

The export activities of the enterprise also prospered with a turnover of $27 million in the second quarter, up 95 per cent over the same period last year and up 43 per cent compared to the previous quarter thanks to the strong recovery of orders from the US and Brazil.

In the same period last year, the Covid-19 pandemic broke out strongly in these two markets, causing orders to decrease. Export volume of radial tires reached 128,000 units, up 90 per cent and bias tires reached 78,000 units, up 160 per cent.

Similarly, thanks to the expansion of consumption and export markets, the Southern Rubber Industry JSC (CSM) recorded second-quarter revenue of 1.39 trillion dong, up 12 per cent over the same period last year. The cost of goods sold increased to 18.5 per cent as consumption volume and input material prices both rose. However, thanks to cost reductions, profit after tax still rose by nearly 21 per cent to 23 billion dong. In six months, the company achieved revenue of 2.47 trillion dong, up 13 per cent. Profit after tax totalled 36 billion dong, up 14 per cent over the same period last year.

This year, CSM aims to export to a number of new markets such as South America and Eastern Europe, on top of current markets including Brazil, India and the US. Export revenue in 2020 increased by 12 per cent compared to the previous year thanks to the output of radial tires, which accounted for 60 per cent.

Sao Vang Rubber JSC (SRC) revenue in the second quarter also increased by 16.5 per cent to 240 billion dong and pre-tax profit increased slightly from 49.8 billion dong to 50.6 billion.

In the first half of the year, its revenue reached 497 billion dong, up 24 per cent. In which, export revenue rose by 31 per cent to 101 billion dong. Its domestic revenue increased 22 per cent to 395 billion dong while profit after tax was the equivalent to the same period last year reaching 24 billion dong.

VIET NAM NEWS/ASIA NEWS NETWORK

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