Mixed fortunes for rubber industry

Friday, Apr 01, 2022 07:50

A worker extracts latex from rubber trees. — VNA/VNS Photo

While some rubber firms are aiming high this year, others have had to lower profit targets due to various risks.

According to the Vietnam Rubber Association, rubber materials shortages have recently pushed up latex prices, bringing higher profits to rubber firms.

In the first two months, rubber exports rose by 7.4 per cent compared to the same period last year, leaving many firms optimistic about the future.

Phuoc Hoa Rubber JSC announced an after-tax profit target of VND744 billion (US$32.5 million) for 2022, up 56 per cent year-on-year.

Southern Rubber Industry JSC followed suit with a target of VND136 billion, breaking from its regular double-digit profits since 2017.

Da Nang Rubber JSC spent over VND900 billion on production expansion and set its Q2 profit target 11 per cent higher than the previous quarter.

However, some firms are more cautious about making optimistic forecasts, reducing their targets on the grounds of several risks.

Dak Lak Rubber JSC expects its pre-tax profits in 2022 to be 9.5 per cent lower than last year due to exchange rate uncertainties.

Its subsidiary in Laos, Daklaoruco (DRI), incurred a loss of VND40 billion in Q4/2021 as the Laotian kip fell to the lowest in 15 years against the dollar.

Since the world currency market is expected to remain volatile, DRI believes it will not improve its performance year, causing its parent company to adjust its profit target.

Similarly, Tay Ninh Rubber JSC anticipates that its subsidiary in Cambodia will run at a loss of VND62 billion in 2022.

Accordingly, the company forecasts less profitability in the financial year, at around VND65 billion, down 41 per cent against 2021.

Meanwhile, Dong Phu Rubber JSC added VND200 billion to its profits in Q4/2021, thanks to the disposal of its rubber trees planted before 1999.

However, as the company did not plant new rubber trees between 1999 and 2002, the number of old trees for sale are expected to fall in the short-term, effectively dragging down its profits.

Additionally, its revenues of VND377 billion derived from land compensation in Bac Dong Phu Industrial Park will not be recognised this year but in the financial year 2023.

As a result, the company estimated profits at VND361 billion in 2022, lower than the figure in 2021 of VND449 billion.

Likewise, Tay Ninh Rubber JSC forecast that it will earn VND75 billion in profits this year, 33 per cent less than last year.

The Association of Natural Rubber Producing Countries said it sees a bright prospect for rubber industries worldwide in 2022.

The association forecast world rubber output would rise by 5.6 per cent against 2021.

However, shortages are likely to worsen and last until 2031 due to the widening gap between supply and demand. — VNS

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