Catfish Firms See Profit Slump

Low export prices and weak new orders have resulted in a sharp drop in profit or even losses for many pangasius exporters in Vietnam. Some have started to shift to the domestic market to offset losses in foreign markets.

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), the Covid-19 pandemic has strongly affected the world seafood industry, resulting in a reduction in consumption and changing consumption trends. Orders dropped by 35-50%. Social distancing in April delayed international trade, causing enterprises to fall short of inputs for processing. Transportation and payment became more difficult. Companies lacked capital to maintain and restore operations.

Particularly, pangasius is the most affected aquatic product as its export value dived over 31% in the first half of 2020. Given weak new orders, high inventories and low export prices, their profit plummeted.

Industry leader Vinh Hoan Corporation (HoSE: VHC) announced that second-quarter profit fell by half from a year ago to VND215 billion when its holding corporation’s business operations shrank due to lower selling prices and the effect of the Covid-19 pandemic. The six-month profit halved to nearly VND368 billion, thus fulfilling 46% of the yearly plan in the low scenario and nearly 35% in the high scenario.

Vinh Hoan Corporation is carrying out an investment strategy to increase profits through the value chain. In addition to traditional pangasius export, it is aiming to boost sales of fish fat and fishmeal by 20% this year and increase sales of collagen and gelatin products by 60% thanks to the new factories in operation.

Nam Viet Corporation (Navico, HoSE: ANV) is also heavily affected by the Covid-19 pandemic because selling prices declined. Second-quarter profit sank by 79% year on year to VND32 billion, lowest since early 2017.

In the first six months, its net revenue dropped by 14% while earnings after tax dropped by nearly 79% to VND75.5 billion. Although it planned the 2020 profit to fall by 72% to VND200 billion, it achieved only 38% of the plan in the first half of the year.

Its export value plunged 52% year on year to VND399 billion in the second quarter. However, Navico's bright spot came from the domestic market where its sales soared 113% from a year ago to VND485 billion. For the first time, its domestic revenue surpassed its exports.

Domestic pangasius market is not very large and enterprises have not strongly exploited it. However, due to weak exporting, many businesses are boosting domestic consumption. Navico has recently cooperated in selling products in the VinEco distribution chain managed by Masan Group. IDI Company has joined hands with BigC. Go Dang Company and Hung Ca Company has cooperated with Hapro.

I.D.I International Development and Investment Corporation (HoSE: IDI) saw a drop of 61% to VND26 billion in the second-quarter profit. The firm said that the Covid-19 pandemic caused a heavy impact on frozen pangasius fillets when the market was disrupted and export prices plummeted.

The six-month profit dropped by 82% year on year to over VND40 billion. In 2020, the company planned to expand the export market and joined hands with farmers to ensure 90-95% of inputs. Nevertheless, its annual profit was expected to fall by 39% to VND160 billion. Its six-month outcome fulfilled just 25% of the yearly target.

Cuu Long Fish Joint Stock Company (HoSE: ACL) earned only VND4 billion in the second quarter, down 93% from a year-ago period. After half a year, the company achieved a profit of over VND5 billion, down 95% and equal to only 7% of the yearly plan.

Even, Mekong Fisheries Joint Stock Company (HoSE: AAM) lost nearly VND600 million in the second quarter (compared to VND3.7 billion a year ago) as export revenue tumbled by half. The six-month profit was only VND71 million, far from the target of VND8 billion of profit before tax this year.

Source: Vietnam Business Forum