HANOI: The price of plastic resin has increased sharply following the price of oil, putting pressure on plastic enterprises.

       According to data from the global financial portal Investing, the price of polyethylene (PE) resin has increased by 10.4% in the past three months, from Dec 9, 2021 to March 8, 2022. Similarly, the price of polypropylene (PP) resin has increased by more than 10%.

       Plastic resins are made from petrol products, typically PP and PE. Therefore, fluctuations in oil prices have directly affected the price of plastic resins.

       Plastic resins account for about 60%-70% of the cost structure of plastic manufacturing enterprises, thus the current high prices of plastic resins lead to the increases in input costs of plastic enterprises.

       In 2021, the price of input materials increased sharply by 1.6 times, making a record hike in history, which greatly affected the performance of the businesses in the industry.

       At a meeting with investors on Feb 17, 2022, Nguyen Hoàng Ngan, general director of Bình Minh Plastics Joint Stock Company said last year, the company made a profit of 214 billion dong (US$9.4mil or RM39mil), down 59% compared to 2020. This was also the lowest profit in the past 13 years.

       In 2022, Bình Minh Plastics sets a high growth business plan, with a target revenue of 5.68 trillion dong (RM1.04bil), an increase of 25% compared to 2021 and pre-tax profit rising by 109% to 560 billion dong (RM102.6mil). This plan was built on the scenario in which the price of plastic materials in the last months of 2021 and the beginning of this year is stable.

       However, with new developments from the world geopolitical situation, the company may not fulfil its targets. — Viet Nam News/ANN

       Facing adverse developments from the market, he said Bình Minh Plastics has proposed a solution, which is controlling input costs. The company will actively monitor raw material prices closely so that it will be able to stockpile enough materials when the prices go down.

       “The board of directors will consider carefully to ensure the competitiveness and profitability of the company,” he said.

       Since 2020, the price of plastic resins has increased sharply, affecting the profit margins of plastic enterprises. Increasing the storage of raw materials is a strategy implemented by leading plastic enterprises.

       Inventory of Bình Minh Plastics at the end of 2021 was nearly VN？619 billion (RM113.5mil), accounting for nearly 22 per cent of total assets.

       At Ti？n Phong Plastic, the inventory value was VN？1.08 trillion, accounting for 22.1 per cent of total assets.

       The gross profit margin of Ti？n Phong Plastic Joint Stock Company (NTP) last year dropped sharply from 31 per cent to 24 per cent. However, the company maintained a slight increase in net profit of 4 per cent compared to 2020 thanks to the reduction of financial expenses and selling and administrative expenses.

       An Phát Xanh Plastic Joint Stock Company (AAA) saw gross profit margin down from 10.46 per cent to 9.9 per cent.

       However, thanks to the revenue from real estate leasing and land leasing, the company still achieved positive growth in profit for the whole of 2021.

       Many other plastic enterprises also saw their gross profit margin decreasing in 2021 due to the increase in raw material prices. — Viet Nam News/ANN