Rubber firms bend with downtimes

Falling rubber prices continue to badly affect natural rubber companies and their profit lines.

International rubber prices had decreased by 3.6 per cent during July 9-21 and so have domestic rubber prices, according to Vietnam Rubber Group, contrasting with the colourful picture of 2011’s favourable business results.  

However, the reduction in domestic rubber prices was lower than that in the world’s rubber prices.  Domestic prices fluctuated within VND58-59 million per tonne ($2,788.5-$2,836.5), said Hoa Binh Rubber Joint Stock Company’s (HRC) spokesman Banh Manh Duc.

He said to avoid risks resulting in decreasing rubber prices, in 2012 the company had cut rubber latex exploitation and purchased it from small rubber farms. Currently, 2012’s rubber exploitation has reduced compared with that in 2011 even though the third quarter is the rubber exploitation season. Specifically, HRC gained more than $2.88 million in after-tax revenue, equal to 50 per cent of 2012’s set target during the first six months, said Duc.

Meanwhile, Tay Ninh Rubber Joint Stock Company (TRC) attained $5.97 million in revenue during the first half of 2012. Of which, only $2.21 million came from rubber producing activities.

According to HRC, its first six months’ business results were badly affected by the downward trend in June, VND66.91 million ($3.22 million) per tonne, that pulled the average rubber price in the first half of 2012 down to only VND58.23 million ($2,799.5) per tonne.

The firm was expanding its rubber tree planting areas in Laos and Cambodia. Phuoc Hoa Rubber Joint Stock Company (PRH) now possesses the largest rubber tree area of about 15,000 hectares amongst the five listed natural rubber companies.  Domestic consumption accounted for 60 per cent of its total rubber volume, while its export value to Asian markets equaled 35 per cent, of which China’s market counted for 20 per cent.

However, due to the downtrend in China’s market, the firm has decreased its export value to this market to prevent from its influence. PHR said it gained $41.15 million in revenue from rubber and  $16.47 million in profit, in the first half of 2012, equal to 67 per cent of 2012’s year target.
 
According to  a report by brokerage house VNDirect, the rubber industry’s total output in the first half of 2012 equaled only 30 per cent of the year’s target.In contrast, tyre-makers such as Danang Rubber Joint Stock Company (DRC), Southern Rubber Industry Joint Stock Company (CSM) and Saovang Rubber Company (SRC) benefited from decreasing inputs prices because both natural and synthetic rubber prices are dropping.

Specifically, DRC reached $8.65 million in revenue, accomplishing 78 per cent of the 2012’s target, during first six months. In other case, CSM had achieved a full year target in the 2012’s first half alone when the figure reached $7.2 million.