Most rubber companies set cautious profit targets for this year over forecasts that rubber prices will stay at low levels. VIETNAM NEWS AGENCY
Most of Vietnam’s rubber companies are setting cautious profit targets for this year over forecasts that rubber prices will remain at low levels.
The Vietnam Rubber group (VRG) at its shareholders meeting late last month announced the 2021 business plans which set the after-tax profit 12 per cent lower than 2020.
Specifically, VRG targeted to earn revenue of 27.1 trillion dong ($1.2 billion) and after-tax profit of 4.6 trillion dong, an increase of 4.2 per cent in revenue by a drop of 12 per cent in profit against 2020.
VRG predicted that 2021 would be a difficult year, especially for latex production which was the core business of the group, as rubber prices were forecast to stay at low levels.
Last year, the company earned revenue of more than 25.9 trillion dong and after-tax profit of 5.23 trillion dong, representing rises of 5.67 per cent and 29.8 per cent over 2019, respectively. The profit mainly came from the VNR’s divestment of 11.8 per cent of stakes at Saigon VRG Investment Corp.
According to Ban Viet Securities Co, VRG earned net profit worth 1.1 trillion dong from the divestment, which helped the company to reach such high profit.
Lowering profit target this year in the context of unpredictable market would be understandable for VRG, Ban Viet Securities said.
Other rubber companies also set cautious targets.
Tay Ninh Rubber JSC (TRC) set a profit target for 2021 nearly 50 per cent lower than last year. TRC targeted to earn revenue of 301 billion dong and pre-tax profit of 57 billion dong, 29.6 per cent and 48.8 per cent lower than last year, which were said to be very cautious targets after the company reported revenue of 326 billion dong, up 8.3 per cent and net profit of 93 billion dong, up 11 per cent, in 2020.
Even rubber companies which had advantages for developing industrial property – a sector considered to be profitable – set modest targets.
Phuoc Hoa Rubber set revenue at 1.921 trillion dong, a drop of 15 per cent, and after-tax profit of 715 billion dong, a drop of 35 per cent, against 2020. This was the lowest profit target of Phuoc Hoa Rubber since 2019 when the company started to convert its land into industrial property.
Phuoc Hoa Rubber said it was facing difficulties from anticipated low rubber demand in 2021, a shortage of labour and impacts of weather and diseases. In addition, the Covid-19 pandemic would cause difficulties in attracting investments in its industrial zones.
According to a report from FPT Securities, rubber prices were forecast to stay at low levels in 2021, around 32-33 million dong per tonne, which would continue to have negative impacts on the latex production of rubber companies and forced many companies to sell rubber wood instead and convert land into industrial property.
Rubber wood prices were predicted to be high this year, driven by the high demand for export of wood and wooden products. Rubber wood prices were forecast at 250 million dong per hectare, up four per cent against last year.
The global production shift was providing opportunities for rubber companies which converted their land into industrial zones.
This year would see a strong divide in business results among rubber companies, FPT Securities said.
VIET NAM NEWS/ASIA NEWS NETWORK
