Two seafood kings see profits fall as business problems mount

Because of unexpected changes in the market or poor business decisions, Minh Phu and Hung Vuong, the kings in the seafood industry, have been seeing a severe drop in profits. 

Hung Vuong Seafood Company, called the ‘catfish King’, has announced the decision to divest from An Lac Real Estate and dissolve the company. Hung Vuong holds a 76 percent stake in the real estate firm with charter capital of VND300 billion.

Hung Vuong will liquidate four land plots with total area of 20,000 square meters.

The company’s management board decided to take back the investment capital to gather strength in its core business field after witnessing unsatisfactory business results in recent months.

Hung Vuong reported post-tax loss of VND97 billion for the first nine months of the 2017 fiscal year, while it made a profit of VND110 billion in the same period last year. 

Because of unexpected changes in the market or poor business decisions, Minh Phu and Hung Vuong, the kings in the seafood industry, have been seeing a severe drop in profits. 

It had planned to earn VND20 trillion in revenue and VND400 billion in 2017. 

The situation is better for the ‘shrimp King’ Minh Phu which has reported revenue of VND3.6 trillion and profit of VND130 billion in the second quarter. 

However, the business results are far lower than in 2013-2014, the time when the company’s manager said ‘Minh Phu can earn as much as it wants’.

Hung Vuong’s history

The name ‘catfish King’ was given to Hung Vuong in 2009 when it began listing shares on the bourse. At that time, Hung Vuong’s exports to 27 countries in Europe brought revenue accounting for 45 percent of total catfish export turnover.

To implement the development plan, Hung Vuong’s board of management had two options: expanding the business scale step by step with the profit it accumulated or expanding the business rapidly with financial leverage.

Hung Vuong decided on M&A deals to develop business rapidly to become No 1 in the market. However, with the deals, Hung Vuong became a big debtor. Relying on short-term bank loans at interest rates of 5-7 percent per annum, Hung Vuong’s debts have increased by VND9.5 trillion since 2012.

Minh Phu’s history 

Unlike Hung Vuong, Minh Phu has met difficulties because of the international market fluctuations. 

After gaining record high revenue of VND15 trillion and post tax profit of VND900 billion in 2014, Hung Vuong hoped it would earn VND19 trillion in revenue and VND1.4 trillion the next year.

However, the real figures were VND12.2 trillion in revenue and the post-tax loss of VND7 billion.

At that time, India and Indonesia devalued their currencies, which made their products cheaper and more competitive than Minh Phu’s.

In 2016, Minh Phu’s profit had fallen to VND82 billion.