Only a few small companies reported year-on-year growth in net profits for the whole year.
2023 was not a favorable year for fertilizer producers, with many companies experiencing significant declines in profits due to lower prices and the high cost of input materials.
In the fourth quarter of 2023, PetroVietnam Fertiliser and Chemicals Corporation (PVFCCo), a leading producer of urea fertilizers, posted a net revenue of over VNĐ3.38 trillion (US$137.4 million), down VNĐ500 billion from the same period in 2022.
An increase in financial revenue and cuts in operational expenses were insufficient to offset the profit decline. As a result, PVFCCo's profit after tax plummeted to just VNĐ107 billion, a decrease of nearly 95 percent year-on-year.
For the whole of 2023, PVFCCo's net revenue amounted to nearly VNĐ13.6 trillion, representing a fall of over VNĐ5 trillion over the previous year. This only fulfilled 78 percent of the company's planned target. Its profit after tax also dropped by more than 90 percent to VNĐ543 billion, meeting only 24.1 percent of the set target.
Similarly, PetroVietnam Cà Mau Fertiliser JSC (PVCFC)’s revenue fell 21 percent to over VNĐ12.6 trillion year-on-year. The company’s profit after tax plunged by 74 percent on-year to VNĐ1.1 trillion.
In 2023, PVCFC achieved a total consumption of over 1.3 million tonnes of various fertilizers, up 20 percent from 2022. Notably, urea comprised the largest portion, accounting for 866,000 tonnes.
The company successfully entered and expanded its presence in the NPK fertilizer market, with a remarkable 92 percent growth in consumption volume.
Đức Giang Chemicals, a major player in the chemical industry, faced a decline in its financial performance. In the fourth quarter of 2023, their net revenue reached nearly VNĐ2.4 trillion, a 23 percent decrease from the same period of the previous year. Their profit after tax also saw a significant drop of 34 percent to VNĐ746 billion, the lowest level in nine quarters.
For the entire year 2023, Đức Giang Chemicals recorded a net revenue of over VNĐ9.7 trillion and a profit after tax of VNĐ3.35 trillion, down 33 percent and 46 percent over the previous year, respectively.
The company attributes the poor business results primarily to the decrease in market prices, which resulted in a 38 percent decline in revenue from their key products, such as phosphoric acid and H3PO4. Revenue from phosphoric acid decreased by 28 percent, while revenue from various types of fertilizers dropped by 12 percent.
In contrast, DAP-Vinachem JSC experienced positive performance in the last quarter of 2023. They posted a net revenue of over VNĐ835 billion, a 3.45 percent increase from the same period in 2022. Profit after tax was 8.8 percent higher, at nearly VNĐ62.5 billion.
It said that the significant increase was attributed to higher DAP consumption of over 61,600 tonnes, representing a nearly 20 percent increase. However, despite the rise in consumption, the average selling price experienced a decline of over VNĐ2 million per tonne, down 13.5 percent year-on-year.
Despite the positive results in the fourth quarter, DAP-Vinachem’s performance for the entire year 2023 was lower. The company achieved a revenue of VNĐ3.2 trillion and a profit of over VNĐ70 billion, marking a 2 percent and over 80 percent decrease from last year, respectively. These figures represent the lowest performance in the past three years for the company.
In 2023, the company had set a revenue target of VNĐ3.24 trillion and a profit after-tax target of VNĐ92.2 billion. With the achieved results, the company reached 99 percent of the revenue target and 70.5 percent of the profit after tax target.
Another company specializing in urea production, Hà Bắc Nitrogenous Fertiliser and Chemicals JSC, said that the unexpected profit in the fourth quarter of 2023 contributed to its full-year profit of VNĐ860.8 billion, with net revenue of VNĐ4.4 trillion. These figures were down 51 percent and 31 percent on-year, respectively.
Nevertheless, this marks the third consecutive profitable year for the company since 2021.
It has also made significant progress in reducing its accumulated losses over the years. As of December 31, 2023, the accumulated losses amounted to over VNĐ2.1 trillion, and the equity capital improved from a negative VNĐ252 billion to a positive VNĐ614 billion.
On the contrary, there are still companies that reported year-on-year growth in net profits for the whole year, although their size is relatively small. These include Lâm Thao Fertilisers and Chemicals JSC with a 68 percent increase in net profit to VNĐ149 billion, Southern Fertiliser JSC with a gain of 26 percent to VNĐ57 billion, and Bình Điền Fertiliser JSC with a 5 percent increase to VNĐ148 billion.
These positive results were mainly driven by stricter management of debts and operational costs.
Prices, demand improvements
According to Vietcombank Securities (VCBS), global fertilizer prices this year are expected to rise slightly from 2023 due to tighter supply conditions.
In the domestic market, fertilizer consumption is seen to grow at a slower rate than in 2023. Anticipated domestic consumption during the fourth quarter of 2023 and the first quarter of 2024, coinciding with the winter-spring crop season, has, however, been delayed with this year's crop season starting in late November.
Meanwhile, the global fertilizer consumption growth rate will decelerate in the medium term, dropping from 4 percent in the fiscal year 2023 to 1.3 percent in the fiscal year 2027, according to the International Fertiliser Association.
VCBS highlights that the price of input gas is a challenging factor to predict, as a fluctuation in oil prices and the allocation of gas sources would significantly impact the gross profit margin of businesses.
(VNS)