HANOI: Fertiliser companies reported profit up by five to 10 times in the first quarter of this year compared to the same period in 2021, mainly due to the strong increase in average selling prices.
Duc Giang Chemicals Group (DGC) achieved profit of 1.5 trillion dong (US$65.5mil or RM278.7mil) in the first quarter of this year, 7.1% higher than the figure of 1.4 trillion dong (RM260mil) recorded in the fourth quarter of 2021 and more than five times higher than the same period last year, at 292 billlion dong (RM54.2mil).
According to estimates by SSI Research, this year, DGC’s revenue will increase by 22% and profit by 25%.
Last year, DGC’s profit spiked by 352%.
On the market, DGC shares have increased 53% since early this year.
Petro Viet Nam Ca Mau Fertiliser JSC (DCM) and Phu My Fertiliser (DPM) have not announced business results for the first quarter of 2022, but according to SSI Research’s estimates, in the first quarter of this year, DCM’s pre-tax profit will reach one trillion dong (RM185.6mil), up 6.6% and Phu My Fertiliser’s profit will reach 1.8 trillion dong (RM334mil), up 10 times over the same period last year, mainly thanks to the strong increase in average fertiliser selling prices.
In 2021, world commodity prices and fertilisers increased sharply.
Since the beginning of this year, the conflict between Russia and Ukraine has pushed up fertiliser prices because Russia – one of the major fertiliser exporting powers – has been subject to economic sanctions. Therefore, domestic fertiliser enterprises continue to benefit.This year, DCM sets a revenue target of 9.05 trillion dong (RM1.68bil), consolidated profit after tax of 513 billion dong (RM95.2mil), down 10% and 72% respectively compared with 2021.
This prudent plan was due to DCM’s concern that the Russia-Ukraine tension will continue to negatively affect the global financial market, making oil and freight prices increase, thus supply may become scarce.
However, according to SSI’s forecast, this year, DCM’s revenue will increase by 31%, profit will rise by 40%. Last year DCM’s revenue and profit increased by 31% and 190%.
This year, DCM will complete transition projects including conversion and supply of raw CO2, research and development centre and a project to produce complex fertiliser from molten urea.
To ensure the production expansion and product diversification for long-term development, Ca Mau Fertiliser also plans to invest in a Long An wholesale warehouse, a micro-organic fertiliser factory, a coal gasification plant and communications station headquarters in Ho Chi Minh City this year.
With DPM, SSI Research also forecasts that DPM’s revenue and profit this year will increase by 22% and 25%, respectively, up 65% and 352% last year.
Previously, Rong Viet Securities Co also forecast that DPM will have positive business results in the first quarter of 2022 and may last until the second quarter of 2022 thanks to the short-term shortage of urea supply due to tensions between Russia and Ukraine, leading to higher fertiliser prices.
Although the outlook for the fertiliser industry is very bright, analysts recommend that investors buying fertiliser stocks keep a close eye on fertiliser price movements in relation to geopolitical fluctuations amid the Russia-Ukraine war.
If there is a positive change in Russia’s export activities, world fertiliser prices may reverse sharply. Besides, restricting exports to ensure domestic fertiliser supply is also a potential risk to fertiliser companies’ business activities. — Viet Nam News/ANN