Fertilizer industry profits have passed their heyday, and the outlook for 2024 is not very positive

The business situation of fertilizer industry companies in the fourth quarter of 2023 and the whole year 2023 will fluctuate significantly. Some businesses face the challenge of reducing selling prices, while others record positive growth and exceed plans.

How are the big players in the fertilizer industry doing business?

2021 and 2022 are considered exceptionally prosperous times for many fertilizer businesses, when revenue and profits both reach historic peaks. This impressive achievement is mainly assessed as a result of the sharp increase in fertilizer prices, starting from 2020, as well as the favorable export market.

However, moving into 2023, with fertilizer prices falling, along with input costs remaining high, the fertilizer industry is facing a rather difficult business picture. However, many “big guys” still exceeded their set goals.

According to the consolidated financial report of the fourth quarter of 2023, PetroVietnam Ca Mau Fertilizer Joint Stock Company (Ca Mau Fertilizer; HoSE: DCM) recorded net revenue of 3,565 billion VND, down 20% compared to the same period in 2022. Gross profit decreased sharply from 1,371 billion to more than 865 billion VND, leading to gross profit margin from 30.8% to 24.3%.

Ca Mau Fertilizer reported pre-tax and after-tax profits of 537 billion and 491.8 billion VND, down 51.4% and 32.2% over the same period last year. According to the explanation, Ca Mau Fertilizer said that although consumption output increased, fertilizer prices fell sharply, pulling revenue down. In addition, business management costs increased due to the addition of the Science and Technology fund in the fourth quarter.

Cumulatively for the whole year 2023, Ca Mau Fertilizer recorded revenue of 12,602 billion VND, profit after tax reached 1,108 billion VND, down 20.8% and 74.3% compared to the results of 2022. The company has exceeded 20% of profit plan after adjustment.

Duc Giang Chemical Joint Stock Company (HoSE: DGC) has just announced its financial statements for the fourth quarter of 2023 with net revenue in the quarter reaching 2,387.7 billion VND, down 23% over the same period last year. Cost of sales decreased by 12%, gross profit of the business reached 784 billion VND, down 39% over the same period.

As a result, Duc Giang Chemical earned 745.7 billion VND, down 33.6%. The parent company’s profit after tax reached 720 billion VND, down 30% compared to the fourth quarter of 2022.

Cumulatively for the whole year 2023, Duc Giang Chemical recorded VND 9,748 billion in net revenue, down 33%. Consolidated profit after tax reached 3,250.4 billion VND, down 46%, parent company’s profit after tax reached 3,109 billion VND, down 44% compared to the previous year. The company has completed nearly 90% of the revenue plan and 104% of the profit plan for 2023.

DAP – VINACHEM Joint Stock Company (code: DDV) announced its financial report for the fourth quarter of 2023, recording revenue of more than 835 million VND, an increase of 3.45%; Net profit is nearly 62.5 billion VND, an increase of more than 777%. According to the explanation, profit after tax increased sharply because DAP consumption increased by nearly 20% over the same period last year, although the selling price decreased by 13.5%.

Ha Bac Fertilizer and Chemicals Joint Stock Company (Ha Bac Fertilizer, UPCoM: DHB) announced its financial report for the fourth quarter of 2023 with net revenue of 1,189 billion VND, an increase of 3.6%. Net profit from business activities was negative 154 billion VND. Ha Bac Fertilizer recorded other income of VND 1,802 billion from the loan restructuring project of the Vietnam Development Bank, helping to report a profit after tax of VND 1,649 billion in the fourth quarter, 19.4 times higher than the same period in 2022.

In 2023, Ha Bac Fertilizer earns 4,413.4 billion VND in net revenue, down 31%; Pre-tax profit reached 860.8 billion VND, down 51%. DHB’s yearly profit decreased because the business recorded consecutive losses in the first 3 quarters of the year.

Consolidated financial statements for the fourth quarter of 2024 of Binh Dien Fertilizer Joint Stock Company (BFC) reached VND 2,202 billion in revenue, an increase of 16%. Cost of goods sold increased by 15%, reaching 1,713 billion VND, pushing BFC’s gross profit to 227 billion VND, an increase of 23%. Pre-tax profit in the fourth quarter of 2023 reached 67.4 billion VND, twice as much as the same period last year. BFC’s 2023 summary, pre-tax profit only reached 196.2 billion VND, down 20%. In 2023, BFC will only complete 89% of its profit plan.

In the fourth quarter of 2023, Southern Fertilizer Joint Stock Company (SFG) recorded net revenue of 419.3 billion VND, double the same period in 2022. Gross profit was 43 billion VND, while the same period was negative 6.6 billion VND . SFG’s profit after tax in the fourth quarter of 2023 reached more than 12 billion VND, with a loss of 6.7 billion VND in the same period. Cumulatively for the whole year 2023, SFG recorded total net revenue of 1,559 billion VND, down 22.4%; Pre-tax profit 57 billion VND, down 8.5%; Profit after tax is 56.8 billion VND, an increase of 12.4% compared to 2022. The company has exceeded the pre-tax profit target of 35%.

Fertilizer industry outlook 2024

In the 2024 outlook report, Vietcombank Securities Company Limited (VCBS) stated that world fertilizer prices in 2024 may increase slightly compared to 2023.

The reason stems from the export restriction moves of the “big guys” in the world fertilizer market. Accordingly, the world’s largest fertilizer producer (accounting for about 15% of global consumption), Russia, has extended the fertilizer export quota policy until May to protect the domestic market. China also continues to limit urea exports to ensure domestic supply and stabilize prices.

In the Middle East region, the Egyptian Government decided to indefinitely extend a 30% gas supply cut for all urea fertilizer producers in the country, greatly affecting global supply.

The supply disruption has caused fertilizer prices to increase since the end of the third quarter of 2023 and has only cooled down around December. The continued increase in prices in 2024 may put pressure on operations. global agricultural production.

According to forecasts of the World Fertilizer Association, the growth rate of world fertilizer consumption will slow down in the medium term, from 4% in fiscal year 2023 to 1.3% in fiscal year 2027.

In the domestic market, experts predict that fertilizer demand in 2024 will increase slowly compared to 2023. Domestic demand is predicted to increase in the fourth quarter of 2023 and the first quarter of 2024 when entering Winter-Spring crop, but this year’s crop came late, starting at the end of November.

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