Rubber firms suffer poor first quarter

Vietnam exported about 396,000 tonnes of rubber latex in the first quarter (Q1) of this year, down 2.6 per cent in volume and 22.9 per cent in value on-year, according to the Agency of Foreign Trade under the Ministry of Industry and Trade.

Rubber exports to major markets have all been reduced compared to the same period in 2022.

The leader of a natural rubber company in southern region opined that rubber exports face hardships this year because the car industry is in the doldrums due to high inflation and low demand.

The export value of several firms in the sector shed from 10-12 per cent in Q1 compared to the same period in 2022, and Q2’s figure is forecast to be similar to Q1, he said.

Unstable rubber prices and less upbeat export in the first quarter leave firms to be cautious in crafting 2023 business targets.

This year, the Vietnam Rubber Industry Group (GVR) has set forth a modest business plan with a sharp fall in the revenue and post-tax profit figures.

Accordingly, GVR has set to reach $164.8 million in revenue and $65.2 million in post-tax profit, down 85 per cent and 71 per cent on-year, respectively.

These figures came out at the company’s recent meeting discussing 2023 production and business plan on April 7.

In the meeting, a GVR leader unveiled that currently the rice of rubber latex averages $1,430 per tonne, down $260-280 per tonne compared to one year ago, resulted in a plunge in its Q1 business results.

Meanwhile, Nguyen Thai Binh, spokesperson at Tay Ninh Rubber JSC (TRC), unveiled that the rubber price falling had hampered the operation of businesses in the sector.

At TRC, the company only raked in $108,690 in Q1 of this year, down half compared to a year ago.

This year, TRC aims to hit $16.2 million in total revenue and $3.3 million in pre-tax profit, down 34 per cent and 13 per cent on-year, respectively.

These targets are set based on the expectation that the average rubber latex price fetches $1,650 per tonne. In Q1 this year, rubber latex fetched an average $1,445 per tonne, down $350 per tonne on-year, leaving the company to only fulfil 4 per cent of its full-year profit target.

Phuoc Hoa Rubber JSC (PHR) is also cautious with 2023 business targets.

Accordingly, PHR aims to reach $23.86 million in consolidated profit this year, down 51 per cent on-year.

This year, PHR is set to sell out 34,300 tonnes of dried latex equivalent, with the price averaging $1,650 per tonne.

Nguyen Duc Dung, deputy general director of Mercantile Exchange of Vietnam, assumed that the volatile rubber price came due to wobbles in the global financial market.

Bank crises in the US and EU have cast a shadow on the global economic outlook, triggering concerns that slowing growth would weaken rubber demand in production and consumption, putting pressure on product prices.

In addition, production activities by major rubber consumers such as China and Japan have yet to strongly rebound, hindering rubber prices to set a stable trend.

Listing outlook looks poor The plans of many firms to list have been slowing down due to unfavourable market and business conditions, and several firms have even made a U-turn on their decision.

Rubber groups aim to cut China reliance As China cuts down on its purchase of rubber from Vietnam, the latter has witnessed a sharp decline in its rubber market share in China.

Plantations dreaming of FSC status for rubber products Vietnam’s rubber industry is struggling to meet the criteria set by the Forest Stewardship Council (FSC), especially those related to the requirement of having at least 10 per cent of a conservation area.