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Fertiliser companies benefit in Covid year

Urea production at PetroVietnam Ca Mau Fertilizer Joint Stock Company.

The benefits of both input and output have brought about impressive profit growth for Vietnam’s fertiliser companies.

Amid the Covid-19 pandemic spreading around the world, all countries have increased their food hoarding, promoting agricultural production and opening up opportunities to increase consumption of fertilisers. In addition, the record low oil price has helped fertiliser manufacturers to significantly cut production costs thanks to the reduction in gas prices.

Specifically, in 2020, PetroVietnam Ca Mau Fertiliser Joint Stock Company (DCM) recorded net revenue of 7.6 billion VND, up 7% year-on-year. While the cost of goods sold only increased slightly by 3%, so gross profit exceeded VND 1,312 billion, a surge of 37% year-on-year.

In addition, expenses are well controlled. In which, financial expenses fell by 39%, helping net profit from operating activities grow by 70%, reaching VND 711 billion. At the end of 2020, DCM’s net profit is VND 665 billion, up 55% year-on-year.

The DCM’s leader said in 2020, the average selling price of commercial urea decreased by about 9.96%. But output increased by nearly 21% because the company boosted export with the export output of over 299 thousand tonnes. In particular, the Cambodian market increased by 32% and the company also expanded its exports to other markets such as Thailand, Myanmar, India and Brazil. DCM’s urea export revenue in 2020 hit VND 1,630 billion, up 47% compared to 2019. Urea is a commodity that accounts for the major proportion in DCM’s revenue structure, with VND 6,025 billion (accounting for 78% of total revenue), up 8% compared to 2019.

At PetroVietnam Fertilizer and Chemical Corporation (DPM), 2020 profit also recorded a growth of 85% compared to 2019, reaching VND 683 billion, resulting from good cost control.

DPM’s 2020 revenue increased only 4% compared to 2019, but cost of goods sold decreased slightly by 1%, so gross profit increased by 30%, reaching VND 1,496 billion.

In addition, financial expenses decreased by 16%, and administrative expenses were equivalent, while selling expenses soared by about VND 100 billion, helping the corporation increase profit significantly.

Similarly, the net profit of Binh Dien Fertiliser Joint Stock Company (BFC) also increased by 69% compared to 2019, reaching nearly VND 167 billion, although the revenue decreased by nearly 12%. The cost of goods sold dropped strongly with a decrease of 14%, helping gross profit increase by nearly 3%, hitting VND 756 billion.

BFC also controlled expenses, in which both financial expenses and selling expenses decreased by 27% and 11%, respectively, and administrative expenses increased only slightly.

According to the General Department of Vietnam Customs, by 2020, Vietnam’s fertiliser export reached 1.16 million tonnes, equivalent to a turnover of US$ 340.5 million, an increase of 40% in volume and 27% in value year-on-year.