Seafood enterprises adjust their revenue in 2023 because of difficulties in exporting

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Production of shrimp for export at Ca Mau Seafood Joint Stock Company. Photo: N.H

Control down

As one of the large-scale pangasius processing and exporting enterprises, Vinh Hoan Joint Stock Company's revenue dropped sharply in the first quarter of the year. In the financial report of the first quarter of 2023, just announced by this enterprise, the company's revenue in the first quarter of the year reached VND 2,221 billion, down 32% over the same period.

Revenue dropped sharply, causing Vinh Hoan's gross profit to decrease by more than half, to only VND384 billion. Gross profit margin dropped sharply from 23.8% to only 12.8%. Vinh Hoan earned nearly VND 219 billion in after-tax profit in the first quarter, down 60% over the same period. Despite a sharp decrease over the same period, the profit of this pangasius business has recovered significantly compared to the profit of nearly VND 200 billion achieved in the fourth quarter of 2022.

Dubbed the "shrimp king", Minh Phu Seafood Joint Stock Company has just announced its financial statements for the first quarter of 2023 with a loss of VND 98.3 billion, while the same period last year recorded a profit of more than VND 91 billion. This is the first time the company has made a quarterly loss in the past 10 years. In 2023, Minh Phu plans to generate revenue of VND17,985 billion, profit after tax of nearly VND1,146 billion. However, in the face of market developments, Minh Phu will have to adjust its business targets for 2023 or try to accelerate it, so it has to wait for the general meeting of shareholders scheduled to take place at the end of June 2023.

Similarly, although it is in the top 10 seafood exporters and in the top 5 largest shrimp exporters of Vietnam, but in the face of difficult export situations and reduced orders, Thuan Phuoc Seafood and Trade Joint Stock Company’s business targets set for 2023 are all lower than those of 2022.

At the recent 2023 Annual General Meeting of Shareholders, Thuan Phuoc Fishery and Trading Joint Stock Company approved the business target of 2023 with a total revenue of 2,300 - 3,000 billion VND; export turnover is from 100 - 130 million USD; export output strives from 8,500 - 11,500 tons; pre-tax profit from VND20-25 billion. To increase exports, the company said, in addition to maintaining traditional markets, the company will diversify shrimp consumption markets, and take advantage of trade agreements to increase export turnover. In addition, the company researches to expand the depth of products with high added value.

At the General Meeting of Shareholders of Ca Mau Seafood Joint Stock Company approved the production and business plan in 2023 with the target of total revenue of VND 825 billion, an increase of 20%; pre-tax profit reached VND 30 billion, down 11.7% compared to 2022; consumption volume 6,438 tons; export turnover reached 32,000 USD.

Besides, the company aims to produce frozen shrimp of all kinds reaching 2,100 tons; in 2023, Soc Trang Seafood Joint Stock Company (Stapimex) sets an export target of 340 million USD, a profit of 500 billion VND and a dividend of 100%. The company also plans to submit a production business plan for the period of 2023 - 2025: The output of frozen shrimp is 90,000 tons, the export value is expected to be $1,020 million. Profit for 3 years reached VND1,500 billion. In which, in 2023, Stapimex aims to produce 30,000 tons of finished products, of which Tan Long Enterprises 12,000 tons and An Phu Enterprises reach 18,000 tons.

Export is still difficult

Although it is forecast that seafood exports will increase from the second quarter of 2023, by the end of April, exports of enterprises are still very difficult. According to Nguyen Hoai Nam, Deputy General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), in the first 4 months of 2023, export orders of enterprises decreased. The reason is that the inflation situation has caused consumption in these countries to decline, and the demand for seafood imports has decreased sharply. Many businesses have signed contracts, but customers have moved, causing a lot of inventory.

According to Le Hang, Communications Director of VASEP, seafood exports in April 2023 continued to decline by 28% compared to the same period in 2022, reaching only 810 million USD. Seafood enterprises are still under heavy pressure because the consumption market has plummeted, export prices have plummeted and domestic production and processing are burdened with high production costs, especially feed and seed and other basic expenses.

By the end of April 2023, seafood exports reached over $2.6 billion, 31% lower than the same period in 2022.

As one of the major shrimp exporters in the Mekong Delta, Sao Ta Food Joint Stock Company is also affected by export difficulties. According to the announced consolidated financial statements for the first quarter of 2023, Sao Ta reported a 24% decrease in net revenue compared to the same period last year, reaching VND 1,008 billion. In the revenue structure, the seafood segment still accounted for a large proportion with 955 billion VND, the agricultural product segment accounted for 55 billion VND.

The cost of goods also decreased by 23% to VND928 billion, accordingly Sao Ta's gross profit reached VND80 billion. This gross profit decreased by 32% over the same period, overall gross profit margin in the quarter was about 7.9%, nearly 1 percentage point lower than 8.8% in the same period last year. According to the leader of Sao Ta Food Joint Stock Company, realizing that logistics costs have increased too high, in recent years, this business has shifted to a nearby export market where Japan is a key market. In the first quarter of 2023, the Japanese market share accounted for more than 40% of Sao Ta's export value. This is also the main reason for the sharp drop in freight costs during the period. The profit margin in the Japanese market is better due to the high proportion of refined and mixed goods, so Sao Ta will focus all its efforts on developing the target market.

According to a report by the Investment Advisory and Analysis Center of SSI Securities Joint Stock Company, in 2023 inflation will continue to be a challenge for the seafood industry in the context of slow turnover of remaining inventories.

Although major seasonal events are coming, these events will not reduce inventories that are already high. SSI forecasts the inventory will be fully cleared in the third quarter of 2023, with orders starting to be received at this point. The fishery's gross margin will decline in 2023. With interest rates expected to remain high for the full year, rising financing costs will continue to weigh on net margins, especially for companies with high leverage. Overall, SSI experts forecast companies to post negative earnings growth in 2023.