Fluctuating cost of goods sold and input costs have eroded the profits of seafood businesses.

Vietnam's seafood industry is gradually showing positive recovery signs from several leading enterprises along with the general recovery trend of the economy in the first six months of this year.

However, the recovery is still not really clear because of the mixed business results recorded in each semi-annual report just announced by enterprises.

Accordingly, although seafood export activities have recovered, for various reasons, fluctuations in cost of goods sold and input costs have eroded the achievements of businesses.

In particular, because seafood export activities to large markets such as the EU and the US depend on sea transport while high sea freight rates have increased revenue but reduced profits.

Typically, Minh Phu Seafood Corporation recorded net revenue in the second quarter of 3,738 billion VND, up 59% over the same period thanks to the effective production activities of shrimp breeding and commercial shrimp companies.

Due to the cost of goods sold increasing by 66%, the "shrimp king"'s net profit was only 38.4 billion VND, although it was still nearly four times higher than the low base level in the same period last year.

In the first six months, Minh Phu recorded a 45% increase in revenue to VND6,488 billion while net profit reached VND46 billion compared to a loss of VND88 billion in the same period last year. Thereby, the company has only completed 35% of the revenue plan and 3.6% of the profit plan for the whole year.

Similar to Minh Phu, Vinh Hoan Joint Stock Company also grew strongly in output but its results still declined.

Accordingly, the company recorded net revenue in the second quarter of VND3,196 billion, up 17% over the same period. However, the high cost of goods sold caused the company's gross profit to decrease by 20%, to VND462 billion.

In addition, operating and financial expenses both increased, causing the "Queen of Pangasius" Vinh Hoan to report a net profit of VND336 billion, down 26% over the same period.

According to the explanation, Vinh Hoan said that the selling price of pangasius products decreased, causing profits to continue to decline during the period despite increased revenue.

Accumulated for six months, Vinh Hoan recorded revenue of VND6,050 billion, up 22% over the same period, but net profit was only VND484 billion, down 26% over the same period.

Another 'big guy' in the pangasius sector, Multinational Investment and Development Corporation, also reported a 31% year-on-year decrease in second-quarter profit to VND18 billion, while net revenue increased by 6% to VND1,934 billion. Negative fluctuations in cost of goods sold, transportation costs, and shipping rates have pushed up the company's expenses.

In the first six months of the year, the company recorded a slight decrease in net revenue to VND3,564 billion while after-tax profit reached VND35 billion, down 20% compared to the same period.

Meanwhile, Sao Ta Food Joint Stock Company has just announced a net revenue increase of up to 20% thanks to the shrimp segment growing up to 22% in consumption output during the period, with the main contribution from the Japanese market - the company's key market.

In fact, thanks to the strong increase in Sao Ta Food's raw shrimp self-sufficiency rate due to the high increase in self-farmed raw shrimp output, the company's gross profit margin during the period improved strongly, increasing by 4.7% compared to the same period.

However, Sao Ta's business results were somewhat restrained when the anti-dumping tax refund had not yet taken place due to the lack of final results on the investigation. The company also recorded anti-subsidy tax provisions, causing a significant increase in sales costs.

As a result, the company recorded a 5% decrease in after-tax profit in the second quarter, reaching only VND72.4 billion.

Recently, the export sector of the whole economy in general and seafood export in particular has shown signs of recovery.

While Europe is a market heavily affected by geopolitical conflicts, Vietnam's seafood exports to other markets are increasing strongly again.

According to data from the Vietnam Association of Seafood Exporters and Producers, exports to the three important markets of Vietnam's seafood, China, the US and Japan, have all increased steadily by about 16%.

The reason why seafood exports have shown signs of recovery in the first months of the year is because demand from markets around the world has increased again, leading to an increase in Vietnam's export orders.

This has helped domestic producers feel more secure and maintain growth. However, to achieve an export turnover of 9.5 - 10 billion USD in 2024, an increase of 3 - 5% compared to last year, the whole industry needs to make more efforts.

Source: The Leader