Rice trading businesses post good results on higher rice price

HÀ NỘI — Vietnamese agricultural companies recorded high profit in 2020 as the country’s rice exports saw good results.

Loading rice for export at Saigon port. VNA/VNS Photo

In 2020, Việt Nam’s rice export volume fell by 1.9 per cent year-on-year to 6.2 million tonnes, but export value increased 11.2 per cent to $3.1 billion, according to calculations based on data from the General Department of Việt Nam Customs.

Climate change and disruptions in supply chains due to COVID-19 have affected Việt Nam’s rice production, resulting in an increase in the rice price. Last year, Việt Nam’s average rice price for export rose 13.3 per cent year-on-year to nearly US$499.3/ton.

The rice price was also boosted by rising demand around the world as many countries stockpiled food due to concerns over the pandemic.

This helped rice trading companies like Lộc Trời Group JSC (LTG), Vietnam National Seed Group JSC – Vinanseed - (NSC) and Trung An Hi - Tech Farming JSC (TAR).

The fourth quarter financial report showed that Lộc Trời’s revenue surged nearly 77.5 per cent year-on-year to VNĐ3.5 trillion in the last quarter of 2020. The company’s profit after tax was VNĐ163.7 billion in the same period, four times higher than that of 2019.

In the whole of 2020, Lộc Trời’s revenue declined by nearly 9.7 per cent to VNĐ7.5 trillion, but it still recorded an increase of over 10 per cent year-on-year in profit after tax to nearly VNĐ369 billion as its expenses reduced.

Lộc Trời is a leading company in trading agriculture commodities, such as pesticides and seeds, and food which mainly is rice.

Vinaseed also saw a sharp increase in revenue in the fourth quarter after slowing down in the first three quarters.

The company’s revenue climbed 22 per cent year-on-year to nearly VNĐ666.6 billion in the last quarter, but its profit after tax fell 6.2 per cent to over VNĐ70 billion as sales and administrative expenses increased 15.6 per cent and 10.5 per cent, respectively. It’s profit after tax in 2020 also decreased to VNĐ194.5 billion.

The seed sector, which mainly is rice, plays an important role in Vinaseed’s businesses, accounting for more than 93 per cent of revenue and profit. Last year, Vinaseed’s industrial centre for seed and agricultural product processing in Đồng Tháp Province was opened, increasing its production capacity by over 40 per cent.

In the fourth quarter, Trung An reported a rise of 8.5 per cent year-on-year in net revenue to VNĐ613.1 billion, while its profit after tax fell sharply in the same period as its financial activities and other expenses rose. The company’s profit after tax decreased by 81 per cent year-on-year to nearly VNĐ6.3 billion.

However, thanks to good results in the first nine months of 2020, Trung An’s profit after tax for the whole year still increased 46.5 per cent to VNĐ88.2 billion.

With the rally of rice prices since the beginning of 2021, investors expect businesses in the industry to take advantage of this trend to see positive results in the first quarter of this year.

Việt Nam’s rice price for export was quoted around US$500/ton in January, according to a report from the United States Department of Agriculture.