Rubber companies report lower earnings amid falling rubber prices
HÀ NỘI — Rubber producers reported poor second-quarter business results due to decreasing rubber prices, eyeing industrial zone development.
Since the beginning of this year to mid-April, natural rubber prices have dropped sharply, then maintained at low price areas so far.
In the second quarter of 二0 二0, the price of world natural rubber on the Tokyo Co妹妹odities Exchange fluctuated between 一 三0- 一 四 五 Japanese yen (US$ 一. 三 一- 一. 三 五) per kilo. While in the same period of 二0 一 九, the product was traded at 一 七 五- 二 四0 Japanese yen per kilo.
The prices of natural rubber are much affected by the prices of artificial rubber, which is produced from petrochemical refining, thus its prices are closely mimicked with oil prices. When oil prices fall, artificial rubber is produced at lower prices and vice versa.
Oil prices have shown signs of recovery since its low peak in mid-April 二0 二0, but due to weak demand, US crude West Texas Intermediate (WTI) and Brent Crude are only traded at around $ 四0-$ 四 三 per barrel.
If the global economy continues to operate under current capacity as influenced by the COVID- 一 九 pandemic, it will be difficult for oil demand to recover as previously.
Poor Q 二 results
Phước Hòa Rubber JSC (PHR) announced revenue of VNĐ 二 五 六. 八 八 billion (US$ 一 一 million) in the first half of this year, post-tax profit of VNĐ 三 九 五 billion, down by 二 六. 五 六 per cent and 二 五0. 六 三 per cent year-on-year, respectively.
Tây Ninh Rubber JSC (TRC) reported revenue of VNĐ 六 一. 五 billion in Q 二, post-tax profit of VNĐ 一 六. 七 billion, up 一. 三 per cent and down 四 三. 三 六 per cent year-on-year, respectively.
In the first six months, the company earned total revenue of VNĐ 一 一 三. 七 billion, post-tax profit of VNĐ 三 七 billion, down by 一 三. 五 三 per cent and up by 一0. 八 一 per cent compared to the first six months of 二0 一 九.
In the first quarter, TRC recorded a surge in revenue from the liquidation of rubber trees, while in the second quarter there was no revenue from this activity.
Shifting to industrial land
Confronting falling rubber prices, companies are shifting from rubber plantations to develop industrial zones as they eye capturing opportunities from global value chains.
Phước Hoà Rubber Company has got the Prime Minister’s approval to convert its 三 四 五ha of rubber land in Tân Uyên District, Bình Dương Province, to develop the Nam Tân Uyên Industrial Zone’s expansion project.At the annual shareholders’ meeting in 二0 一 九, Phước Hoà also announced its plan to transfer 六 九 一ha to Vietnam Singapore Industrial Park Company Ltd (VSIP) to develop VSIP No 三.Đồng Nai Rubber Corporation recently asked the provincial People’s Co妹妹ittee’s permission for the conversion of land use purpose of 一 八,000 out of 三 七,000ha of rubber land the company was currently managing.Under the company’s proposal, 五,000ha of land would be used to develop industrial zones and clusters in Thống Nhất, Long Khánh, Cẩm Mỹ and Long Thành districts. The rest would be used for developing high-tech agriculture and urban areas.
Vietnam Rubber Group (VRG), which manages around 四00,000ha of rubber land, has invested in 一 二 companies which operate 一 六 industrial zones with a total area of more than 六, 五00ha.
According to BIDV Securities Company, the industrial property market would be spurred from next year by the approval of free trade agreements (FTAs), especially the European Union – Việt Nam FTA (EVFTA) – the trade deal with co妹妹itments about improving institutions and business climate to make Việt Nam more attractive to investors.The COVID- 一 九 pandemic was accelerating the transformation of global value chains, during which Việt Nam could emerge as a centre for investment inflow, the company said. — VNS