Cement businesses reduce profits because of the burden of costs
The high prices of coal, gasoline and many other fuels make production costs go up, making the profits of cement businesses decline.
Although revenue in the first quarter grew, the profit of Ha Tien Cement Joint Stock Company 1 (Vicem Ha Tien – HT1) still decreased by nearly 74% compared to the same period last year, reaching nearly 25 billion dong. This is the company’s lowest profit quarter since the first quarter of 2018. Similarly, Vicem Gypsum Cement Joint Stock Company (TXM) in the quarter and then lost more than double compared to the same period in 2021 and is the heaviest loss in the past 13 years.
Compared with the first quarter of last year, Vicem Hai Van Cement Joint Stock Company (HVX) had a revenue decrease of more than 17%, profit after tax decreased by 8%. As for Vicem Hoang Mai Cement Joint Stock Company (HOM), profit after tax inched slightly over the same period, net operating profit decreased by 93%, only at 19 million dong. The profit of this business mainly comes from other profits, which suddenly increased by 3 times.
The production line at Vicem Ha Tien. Image: HT1
Profit many cement enterprises negative performance mainly due to high cost pressure. Vicem Ha Tien said that in the first quarter of the year, the price of coal, oil, gypsum and many other materials skyrocketed under the impact of the Russia-Ukraine conflict. This burden caused the company to reduce its gross profit by more than 76 billion dong. Meanwhile, Vicem Gypsum Cement is under pressure from transportation costs, loading and unloading. This amount more than doubled in the same period last year…
And Vicem Hoang Mai was heavily influenced by rising coal and oil prices. In a recent shareholder document, the company’s management said the world coal price “shocked” from $230 a tonne at the end of February to $415 a ton in the early March period. Crude oil prices also peaked at $125 a barrel, the highest in 14 years, causing the company’s input costs to increase sharply.
According to the Vietnam Cement Association, coal is the most important input material, usually accounting for about 35-40% of the cost of cement production. Of which, nearly two-thirds of coal must be imported, making the cost of cement production in Vietnam highly dependent on international coal prices.
Cement is also an energy-intensive manufacturing industry, with electricity costs accounting for 15-20% of finished products. Although EVN has committed not to increase electricity prices in 2022, VnDirect still predicts that electricity production costs of cement companies will increase.
Coal prices rose sharply while the cement industry depended on imports for 66%. The source: VnDirect
Facing cost pressure, many businesses have adjusted selling price of cement with a popular increase of about 100,000 dong a ton in the second half of March, some units raised the price to 150,000 dong a ton. Recently, businesses continue to raise prices. Vicem But Son adjusted up 50,000-70,000 VND a ton, Bim Son Cement increased by 70,000-95,000 VND a ton, The Vissai Cement raised the price by 80,000 VND a ton…
Forecasting the general situation for the whole year, VnDirect believes that listed cement companies can improve their business results thanks to the recovery of the apartment market in Ho Chi Minh City and Hanoi and the recovery of resort real estate projects. . This reduces the export of semi-finished products – clinker, helping businesses gradually escape from high transportation costs, high dependence on foreign markets, making business less efficient.
Siddhartha
at Blogtuan.info – Source: vnexpress.net – Read the original article here
