Rising prices of plastic materials put a burden on businesses

The price of plastic resin increases sharply following the price of oil, putting pressure on plastic enterprises.

Inside a Tiền Phong Plastic Joint Stock Company factory. The gross profit margin of Tiền Phong Plastic Joint Stock Company (NTP) last year dropped sharply from 31 per cent to 24 per cent. — Photo courtesy of the company

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 per cent in the past three months, from December 9, 2021 to March 8, 2022. Similarly, the price of polypropylene (PP) resin has increased by more than 10 per cent.

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 per cent 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 February 17, 2022, Nguyễn Hoàng Ngân, General Director of Bình Minh Plastics Joint Stock Company (BMP) said last year, the company made a profit of VNĐ214 billion (US$9.4 million), down 59 per cent 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 VNĐ5.68 trillion, an increase of 25 per cent compared to 2021 and pre-tax profit rising by 109 per cent to VNĐ560 billion.

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.

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 VNĐ619 billion, accounting for nearly 22 per cent of total assets.

At Tiền Phong Plastic, the inventory value was VNĐ1.08 trillion, accounting for 22.1 per cent of total assets.

The gross profit margin of Tiền 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. — VNS

Source: VNA
vietnamnews.vn

Related News

Businesses need support from vietnamese representative offices abroad

Businesses need support from vietnamese representative offices abroad

VCN - Several heads of Vietnamese representative offices abroad believe that Vietnamese businesses need to prepare solutions to respond to the changing global economy and meet the increasing demands of the international market.
What do businesses need for digital transformation?

What do businesses need for digital transformation?

VCN - According to experts, to support businesses in successful digital transformation, the state needs to complete the policy framework and testing mechanism (sandbox) for the development of digital economy, green economy, circular economy and new business models. At the same time, reform institutions to attract investment in digital technology in the direction of maximizing convenience for capital contribution, share purchase, merger and acquisition of digital technology enterprises. Create a favorable environment to promote digital transformation and support business development.
The realities of cutting down on business licenses

The realities of cutting down on business licenses

VCN - According to the assessment of the National Assembly's Economic Committee, some regulations and administrative procedures at some agencies, units and localities are cumbersome and have not been thoroughly cut down, causing difficulties for businesses.
Bac Ninh Customs encourages customs brokerage services

Bac Ninh Customs encourages customs brokerage services

VCN - Bac Ninh Customs Department recommends supporting compliant customs brokers to approach large enterprises to have the opportunity to sign contracts and fully perform the role of customs brokers as prescribed.

Latest News

US initiates investigation into pharmaceutical capsule shells imported from Việt Nam

US initiates investigation into pharmaceutical capsule shells imported from Việt Nam

Hard capsule pharmaceutical shells from Brazil, China and India are also being investigated.
UKVFTA gives advantages to Vietnamese fishery products in the UK, urging focus on quality for further expansion

UKVFTA gives advantages to Vietnamese fishery products in the UK, urging focus on quality for further expansion

To better exploit the tariff incentives from the UKVFTA, it is necessary for Vietnamese fishery producers and exporters to focus on improving quality and supply capacity to expand market share in the UK
Agricultural, forestry and fishery trade surplus value shoots up

Agricultural, forestry and fishery trade surplus value shoots up

VCN - According to the Ministry of Agriculture and Rural Development, the total export turnover of agricultural, forestry and fishery products in the first 10 months reached 51.74 billion USD, up 20.2% over the same period in 2023. Notably, the trade surplus value recorded a spectacular increase year on year.
New export and business cooperation opportunities from "dual conversion"

New export and business cooperation opportunities from "dual conversion"

VCN - According to a recent study from NielsenIQ, 16% of Vietnamese consumers consider a sustainable future as one of the important factors in their consumption decisions.

More News

VN

VN's food processing industry struggles to improve quality and value chain integration

Despite accounting for 19.1 per cent of Việt Nam’s processing sector, the food processing industry has been struggling with major issues such as poor-quality raw materials and subpar value chain integration, said industry insiders and economists.
Approach strategy of the seafood industry when implementing UKVFTA

Approach strategy of the seafood industry when implementing UKVFTA

VCN - As one of Vietnam's strong export industries to the UK, especially when the Vietnam - United Kingdom of Great Britain and Northern Ireland Free Trade Agreement (UKVFTA) comes into effect, with a detailed information approach strategy, it has created a great driving force to promote the export of Vietnamese seafood products to this market.
Mid-November: Vietnam

Mid-November: Vietnam's trade volume matches 2023 total, eyes record-breaking growth

VCN - By mid-November 2024, Vietnam's total import-export turnover reached an impressive US$681.48 billion, equaling the full-year trade figure for 2023
Vietnamese enterprises facing challenges from cross-border e-commerce platforms

Vietnamese enterprises facing challenges from cross-border e-commerce platforms

VCN – In recent years, with the rapid development of cross-border e-commerce (CBEC) platforms, domestic enterprises in Vietnam have been facing numerous difficulties and challenges.
Vietnam, Malaysia eye new milestone in trade ties

Vietnam, Malaysia eye new milestone in trade ties

The official visit to Malaysia from November 21-23 by Party General Secretary To Lam is expected to open up new opportunities for and mark a new milestone in the economic and trade cooperation between Vietnam and Malaysia. Vietnam and Malaysia are key economic, trade, and investment partners. Their economic and trade ties have steadily grown since the two nations established diplomatic relations in 1973.
Shrimp exports surge in 10 months, generating 3.2 billion USD

Shrimp exports surge in 10 months, generating 3.2 billion USD

Vietnam’s shrimp exports in October reached US$394 million, a strong 24% increase year-on-year, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).
Vietnam’s exports to the U.S. near US$100 billion milestone

Vietnam’s exports to the U.S. near US$100 billion milestone

VCN - By the end of October, Vietnam's exports to the United States approached US$100 billion, reaffirming its position as Vietnam's largest export market.
From the “abnormal” coffee price, worries about the new crop

From the “abnormal” coffee price, worries about the new crop

VCN - The Vietnamese coffee industry enters the new crop with the question of what is a reasonable price to ensure benefits for coffee growers while still retaining international consumers.
What obstacles limit the market share of Vietnamese goods in the UK?

What obstacles limit the market share of Vietnamese goods in the UK?

VCN - Vietnamese goods account for only about 1% of total imports into the UK market. One of the reasons is that they have not yet built their own brands and have not focused on effective strategies and approaches to market information.
Read More

Your care

Latest Most read
US initiates investigation into pharmaceutical capsule shells imported from Việt Nam

US initiates investigation into pharmaceutical capsule shells imported from Việt Nam

Hard capsule pharmaceutical shells from Brazil, China and India are also being investigated.
UKVFTA gives advantages to Vietnamese fishery products in the UK, urging focus on quality for further expansion

UKVFTA gives advantages to Vietnamese fishery products in the UK, urging focus on quality for further expansion

To better exploit the tariff incentives from the UKVFTA, it is necessary for Vietnamese fishery producers and exporters to focus on improving quality and supply capacity to expand market share in the UK
Agricultural, forestry and fishery trade surplus value shoots up

Agricultural, forestry and fishery trade surplus value shoots up

VCN - According to the Ministry of Agriculture and Rural Development, the total export turnover of agricultural, forestry and fishery products in the first 10 months reached 51.74 billion USD, up 20.2% over the same period in 2023. Notably, the trade surp
New export and business cooperation opportunities from "dual conversion"

New export and business cooperation opportunities from "dual conversion"

According to a recent study from NielsenIQ, 16% of Vietnamese consumers consider a sustainable future as one of the important factors in their consumption decisions.
VN

VN's food processing industry struggles to improve quality and value chain integration

Despite accounting for 19.1 per cent of Việt Nam’s processing sector, the food processing industry has been struggling with major issues such as poor-quality raw materials and subpar value chain integration, said industry insiders and economists.
Mobile Version