Profits in agricultural enteprises while some enterprises are happy, the other cries

Business results in the second quarter in 2017 of agricultural enterprises witnesses a strong divide between the livestock and other areas due to the effect of the significant decline in pork meat prices in the early year.

Livestock face difficulties

Net revenue in the second quarter of 2017 of Dabaco Group JSC fell by 32% compared to the same period in the last year, only reached 1,073 billion vnd; gross profit also reduced by 69%, to nearly 59 billion vnd. Meanwhile, costs of sale and business management increased by 4% and 13 %, respectively. Moreover, other profits in the period of Dabaco only reached 1.4 billion vnd, while the same period in the last year reached 149 billion vnd. Thus, pre-tax profit of the company was negative at 32 billion vnd, reduced sharply compared to the revenue of 236 billion vnd in the same period in the last year. Accumulated for the first 6 months of 2017, Tabaco's pre-tax profit was negative at 6.4 billion vnd, while the interest in the same period in the last year was 309 billion vnd.

According to Ms. Nguyen Thi Hue Minh, Spokesman of Dabaco, the second quarter of 2017 is the toughest time of the company. The decline in the price of animal feed and live hog price (the lowest price of live hogs is about 19,000 VND/ kg) caused the reduction of 78 billion vnd in the production and trading of feed and animal husbandry compared to the same period in last year. Production activities like breeding stock and chickens also affected the livestock sector. Due to the low price of live hogs, the farmers did not dare to continue to repopulate, affecting the price and the consumption of breeding stock of its subsidiaries. Accordingly, the net profit of this activity decreased over 37 billion compared to the same period in last year.

Similarly, Mitraco Feeding JSC’s net profit in the second quarter of 2017 also decreased by 44% compared to the same period in the last year. According to Mitraco board, the average sale price of pork products in the second quarter of 2017 reduced by 56% compared to the same period in 2016, while the proportion of sales from this product accounted for 77% of the company’s revenue. The average price of hogs, breeding stock, etc. only accounts for 60-65% of the production cost. Along with that, The costs of selling and business management also increased sharply by 204% and 29%, respectively. As a result, the company lost nearly 31 billion vnd, while profitability was 6.5 billion vnd in the second quarter of the last year.

In Vietnam Livestock Corporation (VLC), despite no losses, the company’s after-tax profit in the second quarter of 2017 also fell by 24% compared to the same period in the last year. According to the VLC’s financial report in the second quarter of 2017, though its profit in the quarter only reduces slightly, the cost of capital increased by nearly 4%, leading the fall of 30% in gross profit.

Many enterprises have a high growth.

While the livestock enterprises were shaken, the pork processing and trading enterprises benefited from a sharp fall in input prices. For example, VISSAN reported its net revenue in the second quarter only increased by 6% compared to the same period in 2016, but its net profit rose over 13%, reached to 25 billion vnd. According to the financial report in the second quarter 2017 of VISSAN, the company’s cost of capital reduce by over 5% that contributes to the sharp increase of 62% in gross profit. The growth has assumed a series of higher expenses such as a 25% increase in interest expenses and a 47% increase in the cost of sales for the company.