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| Workers in Quang Tri Rubber Company collect rubber latex. — VNA/VNS Photo Ho Cau |
HA NOI (Biz Hub) — A decrease in global and domestic rubber prices had cut into both profits and shares in rubber firms, Securities Investment reported.
According to the Viet Nam Rubber Group (VNR), the global rubber price had fallen to US$1,500 per tonne from $5,000 per tonne in 2011.
The VNR also reported that rubber prices in the domestic market were fluctuating at around VND31 million ($1.43 million) per tonne at the moment, while the production cost is already VND30 million ($1.39 million) per tonne.
As a result, four out of six rubber shares listed on the HCM Stock Exchange (HOSE) have declined since the beginning of the year.
The Southern Rubber Joint Stock Company (CSM) reported that its first quarter profits fell by 30.4 per cent to VND54.6 billion ($2.53 million) against the same period last year.
CSM's value on the southern bourse has also decreased from VND43,000 in January to VND39,400 at the end of the last session.
Similarly, Dong Phu Rubber Company (DPR) recorded revenue of VND37.7 billion ($1.74 million) in the first quarter, a decrease of 28 per cent from last year's figure. DPR's profit mostly came from selling its farms.
Shares in DPR have fallen 10 per cent since the beginning of the year to VND32,900.
Only two rubber shares have risen on the market, but their growth and liquidity have been unstable.
Hoa Binh Rubber Joint Stock Company (HRC) recorded total revenue of VND55 billion ($2.55 million), including VND26.9 billion ($1.24 million) from rubber production and a pre-tax profit of VND28 billion ($1.3 million).
HRC reported that farm sales alone accounted for VND28 billion ($1.3 million), half of the company's revenue in this first quarter.
HRC's share have risen from VND45,800 in March to VND46,400 after the last session, but liquidity has remained. In the last ten sessions, HRC's average trading volume has been only 218 shares.
In order to cope with problems in the rubber industry, the VNR will ask rubber firms to cut 30 per cent of total investment to reduce production costs.
Tran Ngoc Thuan, director general of the VNR, said that rubber companies should maximise their harvests on rubber plantations by growing other crops there.
Some firms had planted other trees like coffee and acacia on the plantations to reduce production costs and make the best use of the available land resources, he added. — VNS