Performance Of Listed Seafood Exporters
By Nguyen Quan
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| Beating the going to mark the official listing on the Hochiminh Stock Exchange of Minh Phu Seafood Corp. in December 2007 |
Among the 20 seafood exporters which have listed on the Hochiminh Stock Exchange (HOSE) and Hanoi Stock Exchange (HNX), some met or exceeded their targets in 2009. However, most of the profits came from non-core investments, as well as the windfall bred by forex adjustments and the Government’s 4% interest subsidy.
The deputy general director of a seafood exporter listed on HOSE says that although the company already expected 2009 to be a tough year, reality was even more gloomy. Based on forecasts and information obtained from partners and market studies, his enterprise set the same target in 2009 as it did in 2008, which was to export 11,000 tons of tra fish, worth US$24.5 million, and to reap an after-tax profit of over VND26 billion. Still, in the first half of 2009, export turnover from Europe and the U.S. shrank by more than 30%. Besides, Russia, which takes a substantial share of the company’s export revenue, stopped importing the company’s products. This seafood exporter ran into enormous problems.
Furthermore, in early 2009, farmers were pessimistic, credit was tightened, profits were dismal and many fisheries farms went out of business. Consequently, tra fish cost VND15,500 per kilo on average, up 3.3% while export prices were merely US$2.16 on average, down 5-7% year-on-year. Consequently, in the first two quarters of 2009, the company earned 30% less revenue and 60% less profit than it did in the same period of 2008.
Although business picked up subsequently thanks to rising demand and forex adjustments, total export in 2009 still plummeted by 18.6% year-on-year in value and after-tax profits only reached 85% of the target, this leader says.
The lackluster performance of listed seafood exporters reflects the general trend in the seafood export sector.Truong Dinh Hoe, general director of the Vietnam Association of Seafood Exporters and Processors (VASEP), says that the country reaped approximately US$4.2 billion of revenue from seafood export in 2009, down about 0.7% year-on-year, or US$300 million. While the initial target of US$4.5 billion was not met, Hoa contends that the result was still commendable in view of adverse global conditions.
Apart from enterprises which failed to meet their targets, some businesses still reaped profits. But their earnings mainly sprang from non-core investments, as well as forex adjustments and the Government’s 4% interest subsidy.
Hung Vuong Seafood Co. (HVG) says that it has attained its target for after-tax profit of VND350 billion in 2009. Preliminary calculations show that thanks to better business in the last few months of 2009 and debt repayments from foreign customers, HVG may get a windfall of some VND150 billion.
At a recent meeting with investors, Duong Ngoc Minh, chairman of HVG, said that it would use its current land reserve to carry out realty projects in 2010, which would be lucrative in the next few years.
Nguyen Van Luc, general director of Fisheries Co. No. 4 (TS4), says that the enterprise reaped some VND280 billion of revenue and VND31 billion of profit in 2009, up 1.5 times and 2.6 times respectively against the figures in 2008. Seafood export accounted for 30% of the total profits. In 2010, TS4 expects to reap 50-60% more profits as it has just inaugurated a tra fish processing factory.
Truong Thi Le Khanh, chairman of Vinh Hoan Co. (VHC), says that the detrimental impacts of the global economic storm in late 2008 and early 2009 made enterprises reluctant to set high targets in 2009. Still, thanks to meticulous preparations in market development strategies, VHC managed to export about 44,000 tons of seafood worth US$115 million last year, up more than 14% year-on-year.
Minh Phu Seafood Corp. (MPC), meanwhile, confronted falling orders and soaring input costs in 2009, says Chu Van An, its deputy general director. Shrimp prices rose from VND40,000-45,000/kg (each kilogram comprises about 100 shrimp) in 2008 to VND60,000/kg, adversely affecting the company’s profits. Still, MPC could attain a profit of VND256 billion and an export turnover of US$160 million, 27% higher than the targets set.
2010: Brighter prospects
Most enterprises expect market conditions to improve in 2010 as the global economic turmoil has bottomed out and consumption will rise again, offering opportunities for Vietnam’s seafood industry in general and seafood export in particular.
An says that at the end of the fourth quarter of 2009, MPC received 20% more orders than it did in the same period of 2008. The company also recruited nearly 2,000 workers in 2009. In contrast, it planned to retrench nearly 1,000 workers in 2008.
Still, An says that MPC is reluctant to sign new contracts as it has yet to know how material prices will change this year and whether farmers will continue rearing fish and shrimp. Moreover, the interest subsidy will fall from 4% in 2009 to 2% in 2010, spelling trouble for businesses.
Khanh says VHC aims to grow by 10% in 2010, but whether this goal can be attained depends on the tax policy regarding animal feed. If a tax is imposed, farmers and enterprises will face various challenges as soaring input costs will make it hard for businesses to achieve their goals.
Based on reality and market demand, Luc from TS4 predicts that Vietnam’s seafood industry will thrive again in 2010. Vietnam’s share of key markets such as Europe, the U.S. and Japan will be consolidated while that of markets in Africa and Arab countries will expand. Therefore, TS4 plans to earn about US$15 million of revenue.
Hoe says VASEP forecasts Vietnam’s revenue from seafood export in 2010 at US$5 billion, enabling the country to become one of the world’s four leading seafood exporters. Shrimp will account for probably US$2 billion and tra fish US$1.5 billion.