Illustrative image (Photo: VNA) Hanoi (VNS/VNA) – Vietnam’s cement sector is facing oversupply and firms needflexible business strategies to overcome the difficulties.
The sector was expected to see many challenges this year due to the complexchanges of the COVID-19 pandemic, with real estate projects short of capital.
Figures from the Ministry of Construction showed the country would have acement output of more than 100 million tonnes this year while local consumptionwas forecast at 67 million tonnes. Meanwhile, cement exports have sharplydecreased. In the first five months of the year, the sector earned only 515million USD from exports, a 13 percent year-on-year decrease.
A report from the FPT Securities Company (FPTS) said the prospects for thehousing construction material segment in 2020 would continue to suffer due totightening management of housing construction permits, along with decreasedhousing demand. In the short term, new construction activities would beaffected, making it harder to sell cement.
In the first five months of 2020, cement consumption reduced by 10 percentyear-on-year. Many firms had to lower their business goals.
Vicem Ha Tien 1 Company approved its goals this year at its recent shareholdermeeting with net revenue of 8.5 trillion VND, down 2.9 percent from last year.Its pre-tax profit goal dropped by 10.6 percent to 830 billion VND.
Last year, the company reached a net revenue of 8.8 trillion VND, up 5 percentfrom the previous year and meeting 99 percent of set targets. Its pre-taxprofit grew by 14 percent to 928 billion VND while after-tax profit was 741billion VND.
Vicem Hoang Mai Company also set a cautious business plan this year with sale of1.6 million tonnes and revenue of 1.6 trillion VND. Its pre-tax and after-taxprofit goals were also set lower than last year.
The cement sector has seen the highest inventory in years with a sudden sharpdecrease in the first five months of the year. By the end of the first quarter,the sector’s inventory was 4.8 million tonnes.
The company said the cement market this year would continue to be a thermometerfor local producers as oversupply was more than 30 million tonnes, causingfierce competition. Therefore, weak firms would have to stop operation,especially in the central region due to increasing supply from Tan Thang CementCompany (Nghe An) with the capacity of 2 million tonnes and Nam Dong CementCompany (Thua Thien Hue). In addition, big cement factories such as Thanh Thang,Xuan Thanh, Long Son, Ha Long and SCG have invested in warehouses anddistribution stations to expand the central region market.
Meanwhile, the Philippine Departmentof Trade and Industry (DTI) has applied safeguard measures from2019 to 2021 on cement imported from Vietnam, which has greatly affected theindustry, because the country is one of the three largest consumer markets.Since the tax was imposed in early 2019, exports to the Philippines havedecreased by 23 percent in volume and 17.4 percent in value, reaching only 257million USD.
FPTS said difficulties both domestically and in exports would make cementinventory in 2020 reach 8 million tonnes, while cement prices in the north,central and south regions would decline by 3.3 percent, 4.1 percent and 1.5 percentrespectively over the same period last year.
Although the prospects for the construction and building materialsindustries in 2020 were not positive, most firms think that this is the timefor restructuring towards more transparent and professional development./.
The sector was expected to see many challenges this year due to the complexchanges of the COVID-19 pandemic, with real estate projects short of capital.
Figures from the Ministry of Construction showed the country would have acement output of more than 100 million tonnes this year while local consumptionwas forecast at 67 million tonnes. Meanwhile, cement exports have sharplydecreased. In the first five months of the year, the sector earned only 515million USD from exports, a 13 percent year-on-year decrease.
A report from the FPT Securities Company (FPTS) said the prospects for thehousing construction material segment in 2020 would continue to suffer due totightening management of housing construction permits, along with decreasedhousing demand. In the short term, new construction activities would beaffected, making it harder to sell cement.
In the first five months of 2020, cement consumption reduced by 10 percentyear-on-year. Many firms had to lower their business goals.
Vicem Ha Tien 1 Company approved its goals this year at its recent shareholdermeeting with net revenue of 8.5 trillion VND, down 2.9 percent from last year.Its pre-tax profit goal dropped by 10.6 percent to 830 billion VND.
Last year, the company reached a net revenue of 8.8 trillion VND, up 5 percentfrom the previous year and meeting 99 percent of set targets. Its pre-taxprofit grew by 14 percent to 928 billion VND while after-tax profit was 741billion VND.
Vicem Hoang Mai Company also set a cautious business plan this year with sale of1.6 million tonnes and revenue of 1.6 trillion VND. Its pre-tax and after-taxprofit goals were also set lower than last year.
The cement sector has seen the highest inventory in years with a sudden sharpdecrease in the first five months of the year. By the end of the first quarter,the sector’s inventory was 4.8 million tonnes.
The company said the cement market this year would continue to be a thermometerfor local producers as oversupply was more than 30 million tonnes, causingfierce competition. Therefore, weak firms would have to stop operation,especially in the central region due to increasing supply from Tan Thang CementCompany (Nghe An) with the capacity of 2 million tonnes and Nam Dong CementCompany (Thua Thien Hue). In addition, big cement factories such as Thanh Thang,Xuan Thanh, Long Son, Ha Long and SCG have invested in warehouses anddistribution stations to expand the central region market.
Meanwhile, the Philippine Departmentof Trade and Industry (DTI) has applied safeguard measures from2019 to 2021 on cement imported from Vietnam, which has greatly affected theindustry, because the country is one of the three largest consumer markets.Since the tax was imposed in early 2019, exports to the Philippines havedecreased by 23 percent in volume and 17.4 percent in value, reaching only 257million USD.
FPTS said difficulties both domestically and in exports would make cementinventory in 2020 reach 8 million tonnes, while cement prices in the north,central and south regions would decline by 3.3 percent, 4.1 percent and 1.5 percentrespectively over the same period last year.
Although the prospects for the construction and building materialsindustries in 2020 were not positive, most firms think that this is the timefor restructuring towards more transparent and professional development./.
VNA
