THE INCREASING PRICE OF MATERIAL HAS NEGATIVE IMPACTS ON THE PLASTIC FIRMS

THE INCREASING PRICE OF MATERIAL HAS NEGATIVE IMPACTS ON THE PLASTIC FIRMS

THE INCREASING PRICE OF MATERIAL HAS NEGATIVE IMPACTS ON THE PLASTIC FIRMS

During the stressful situation of the Covid-19 pandemic, the high price of raw material made the production and business activities of many plastic enterprises difficult

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THE INCREASING PRICE OF MATERIAL HAS NEGATIVE IMPACTS ON THE PLASTIC FIRMS

During the stressful situation of the Covid-19 pandemic, the high price of raw materials made the production and business activities of many plastic enterprises difficult. The value of revenue and profit tends to decrease sharply when enterprises are under pressure of increasing costs and decreasing output.

During the online meeting on October 19, 2021, about the business results of the third quarter and the direction of the fourth quarter of Binh Minh Plastics Joint Stock Company (BMP), General Director Nguyen Hoang Ngan admitted that the third quarter of this year is a sad record during 44 years of operation when all 3 months of business lost. This is the first quarter that BMP has suffered a loss since going public in 2006, with a loss of 26 billion dongs, while the same period last year profited 153 billion dongs.

BMP's revenue in the third quarter of 2021 reached VND 529 billion, down 53%; production output only reached 11,000 tons, down 59% over the same period.

It is known that when Ho Chi Minh City implemented social distancing under Directive 16, BMP's factory stopped production from mid-July. Two key factories of BMP in Binh Duong and Long An have a total capacity of 120,000 tons/year, but during the time of social distancing, the capacity can only be maintained at 15-20%.

Bao Viet Securities Company (BVSC) assesses that the third quarter of 2021 is an extremely difficult quarter for BPM when the price of raw materials increases, revenue decreases, and the "3 spot" operation makes the business incur more expenses. expenses such as allowances for workers, medical tests, on-site accommodation, etc.

Accumulated in the first 9 months of 2021, BMP's revenue is 3,135 billion dong, down 9%; profit after tax is 100 billion dongs, down 76% compared to the same period in 2020.

The high price of raw materials since the beginning of 2021 has been great pressure for businesses in the plastic industry. BMP leaders said that the price of plastic materials increased sharply in May 2021, then turned to decrease slightly, but now rebounded. In 2020, the average price of plastic materials is about 1,000 USD/ton, but in 2021 it could reach 1,600 USD/ton due to the influence of supply and difficulties in transportation.

At Tien Phong Plastic Joint Stock Company (NTP), General Director Chu Van Phuong said that the price of raw materials increased, the Company had the policy to adjust the selling price, but the profit in the third quarter of 2021 still decreased sharply compared to the previous quarter. with the same period last year.

In the third quarter of 2021, NTP recorded consolidated revenue of VND 1,016 billion, down 15%; consolidated profit after tax of VND 77.7 billion, down 43.6% compared to the third quarter of 2020. In the third quarter of this year, reducing interest expenses and other operating expenses helped NTP increase profit after tax by VND 24 billion, but component sales decreased by VND 176 billion compared to the same period last year. profit after tax is VND 53 billion.

In the first 9 months of 2021, NTP recorded revenue of VND 3,355 billion, profit after tax of VND 347.7 billion, up 1% and 2% respectively over the same period last year. Notably, as of September 30, 2021, inventories doubled compared to the beginning of the year, reaching VND 1,292 billion; liabilities was 2,312 billion dong, up 77% compared to the beginning of the year and accounting for 45% of total assets, of which mainly short-term debt (VND 1,716 billion, accounting for 74% of total debt).

Similarly, increased input cost pressure and difficult operating environment due to the Covid-19 epidemic caused Da Nang Plastics Joint Stock Company (DPC) to record a decrease in revenue and profit after tax by 43% and 62%, respectively. compared with the same period last year, only reached VND 8.21 billion and VND 543 million.

Accumulated in the first 9 months of 2021, DPC decreased by 27% in revenue, recording VND 39.4 billion, but profit reached VND 6.06 billion, up 40% compared to the same period last year, thanks to high profit in the first quarter, mainly due to cost savings.

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The last quarter of the year

Mr. Nguyen Hoang Ngan said BMP has prepared all resources to return to production. As of October 19, about 98% of the Company's employees have received the 1st dose of vaccine and 92% of the 2nd dose. The rate of workers ready to return to work is 95%.

The General Director of BMP shared that revenue is showing signs of improvement when in the first 20 days of October, the company recorded an average daily revenue of about VND 21 billion. This motivates BMP to expect better business results in the fourth quarter of 2021.

However, the pressure on raw material prices is still a burden. The General Director of BMP forecast that in the last quarter of 2021, the price of raw materials could reach 1,800 USD/ton, even setting a record at 2,000 USD/ton. Accordingly, businesses will have to increase selling prices to ensure profit margins.

In fact, plastic enterprises entered the fourth quarter with great pressure when business results were far from the target for the whole year. BMP plans to achieve revenue of VND 5,200 billion in 2021, profit after tax of 523 billion dong, but by the end of September, it has completed more than 60% of the revenue target and more than 19% of the profit target.

DPC set a target to achieve revenue of 85 billion dong in 2021, but only 47% have been achieved after 9 months. Regarding the profit plan, this year's target is 9 billion dong of pre-tax profit, down 11% compared to the implementation level in 2020, so by the end of September, the Company has completed 84% of the target.

NTP also proactively set a profit target in 2021, down 17% compared to the performance in 2020, at VND 432 billion. By the end of September, the enterprise completed 70% of the revenue plan and 80% of the whole year's profit plan.

Hanoi Plastics Joint Stock Company (NHH) has not announced business results for the third quarter of 2021. Previously, NHH set a target for the third quarter of this year to achieve consolidated revenue of VND 550 billion, consolidated profit after tax of VND 50 billion, up 90% and 233% respectively over the same period last year. If this plan is feasible, NHH is likely to be the company with the most positive business results in the third quarter of the plastic industry, when most of it is affected by the epidemic and input price pressure.

With the growth prospect of traditional plastic components and plastic flooring, NHH plans to achieve revenue of VND 1,900 billion in 2021, up 78.5% and profit after tax of VND 150 billion, up 30% compared to 2020.

By the end of 2021, NHH is expected to run at the maximum capacity of its floor paneling factory, increase exports to the US, and expand FDI customers in the engineering plastics and precision mold segments.

Enterprises are making efforts to deploy production and business activities, with the mindset of focusing on growth, sprinting to complete the 2021 plan, when the epidemic is under control and the economy gradually recovers.

According to BVSC, plastic enterprises are expected to have double motivation in the fourth quarter of 2021. Firstly, consumption will recover thanks to the pent-up demand before the epidemic and the demand in the fourth quarter is usually the largest compared to other quarters. Second, an increase in selling prices will help businesses improve profit margins.

For example, an increase in PVC price is expected to help BMP improve its profit in the fourth quarter. BVSC forecasts that in 2021, BMP's revenue will reach VND 4,627 billion, down 3%; profit after tax is VND 213.5 billion, down 59.1% compared to 2020. Thus, the profit in the last quarter of 2021 of BMP is expected to be more than double that of the previous 9 months.

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