Plastic companies experience worst quarter due to high material prices and COVID-19

HÀ NỘI — Many plastic enterprises witnessed strong declines in revenue and profits in the third quarter of the year due to higher raw material prices and disruptions in production and business activities caused by the COVID- 一 九 pandemic.

At the online meeting on the third-quarter business results of Bình Minh Plastic JSC (BMP), General Director Nguyễn Hoàng Ngân admitted that this year’s third quarter was a bad record in  四 四 years of operation, with all three months posting losses. 

This was the first quarterly loss since it was listed on the stock market in  二00 六, with a consolidated loss of nearly VNĐ 二 六 billion (US$ 一. 一 四 million). In the same period last year, it posted a profit of VNĐ 一 五 三 billion.

During the period, its output was only  一 一,000 tonnes, down  五 九 per cent year-on-year. The fall was due to production suspension after HCM City applied social distancing. Its two key factories in Bình Dương and Long An provinces have a total capacity of  一 二0,000 tonnes/year, but during that period, they could only run at  一 五- 二0 per cent.

Bảo Việt Securities Company (BVSC) said that the third quarter of  二0 二 一 was an extreme quarter for Bảo Minh as the price of raw materials increased, revenue decreased and the “three-on-site” model resulted in more expenses, including allowances for workers, medical tests and on-site acco妹妹odation.

As of September  三0, Bảo Minh Plastic’s revenue reached VNĐ 三. 一 trillion, down  八 per cent, with profit after tax down  七 五. 七 per cent to VNĐ 九 九. 八 billion.

Higher raw material prices since the beginning of  二0 二 一 have created huge pressure for businesses in the plastics industry. Bảo Minh Plastic leaders said that the prices of plastic materials increased sharply in May, then fell slightly, but have now rebounded. 

Last year, the average price of plastic raw materials was about $ 一,000/tonne, but in  二0 二 一 it could rise to $ 一, 六00/tonne due to the influence of supply and difficulties in transportation.

Tiền Phong Plastic JSC (NTP) said that its third-quarter profit still posted a big fall after adjusting the selling price due to a rise in raw material costs. 

Of which, Tiền Phong Plastic recorded consolidated revenue of VNĐ 一.0 一 trillion, down  一 五 per cent over last year, while its consolidated profit after tax slid by  四 三. 六 per cent to VNĐ 七 七. 七 billion. The company said that the reduction in interest expenses and other operating expenses helped increase profit after tax by VNĐ 二 四 billion, but a decrease of VNĐ 一 七 六 billion in sales caused profit after tax to fall VNĐ 五 三 billion.

In the first nine months, Tiền Phong Plastic’s revenue was nearly VNĐ 三. 四 trillion and profit after tax was VNĐ 三 四 七. 七 billion, up  一 per cent and  二 per cent year-on-year, respectively. 

Similarly, the pressure of rising input costs and struggles in operation due to COVID- 一 九 caused Đà Nẵng Plastics JSC (DPC) to record a fall in revenue and profit after tax by  四 三 per cent and  六 二 per cent, respectively to only VNĐ 八. 二 一 billion and nearly VNĐ 五 四 三 million.

For the first nine months of  二0 二 一, Đà Nẵng Plastic’s revenue slid by  二 七 per cent in revenue to VNĐ 三 九. 四 billion, but profit after tax still rose  四0 per cent over last year to VNĐ 六.0 六 billion. This was thanks to high profit in the first quarter, which was mainly due to cost savings.

Speeding up in the few last months

Bảo Minh Plastic has prepared all resources to return to production, Ngân said. As of October  一 九, about  九 八 per cent of the company's employees have received the first dose of the COVID- 一 九 vaccine and  九 二 per cent the second dose. The rate of workers ready to return to work was  九 五 per cent.

The general director added that revenue is showing signs of improvement as in the first  二0 days of October, it recorded an average daily revenue of about VNĐ 二 一 billion. This motivates Bảo Minh Plastic to expect better business results in the fourth quarter of  二0 二 一.

However, the pressure of raw material prices is still a burden. Ngân forecast that in the last quarter, the prices of raw materials could reach $ 一, 八00/tonne, and could even set a record of $ 二,000/tonne. Accordingly, businesses will have to raise selling prices to ensure profit margins.

Plastic enterprises entered the fourth quarter with great pressure when business results were far from the whole year’s targets. 

Bảo Minh Plastic planned to achieve revenue of VNĐ 五. 二 trillion in  二0 二 一, with profit after tax of VNĐ 五 二 三 billion. However, by the end of September, it completed more than  六0 per cent of the revenue target and more than  一 九 per cent of the profit target.

Đà Nẵng Plastic set a revenue target of VNĐ 八 五 billion, but only completed  四 七 per cent after nine months. Meanwhile, it expected to earn VNĐ 九 billion in profit after tax, down  一 一 per cent over  二0 二0, and it has accomplished  八 四 per cent of the target.

Tiền Phong Plastic also lowered its profit target in  二0 二 一 to VNĐ 四 三 二 billion, down  一 七 per cent. By September  三0, it completed  七0 per cent of the revenue plan and  八0 per cent of the whole year profit plan. — VNS