Facing business constraints, Vietnam Rubber Group sets modest 2024 profit growth target

State giant Vietnam Rubber Group has set modest revenue and profit growth targets for 2024, citing several business constraints including a sharp fall in rubber prices.

In a plan submitted to shareholders at an extraordinary general meeting held Friday, the group has targeted VND25 trillion ($1 billion) in revenue and VND3.25 trillion ($130.16 million) in after-tax profit this year, a year-on-year increase of just 1-2%.

The group, listed on the Ho Chi Minh Stock Exchange as GVR, also planned to pay a 3% dividend this year, the meeting heard.

Business was difficult in 2023 due to a sharp decline in rubber prices. The wood industry was almost frozen with a lack of orders. The progress made by several industrial park projects was slower than expected. Besides, the group was also affected by unfavorable international factors including geopolitical conflicts and an economic slowdown.

However, rubber prices increased sharply in the first quarter of 2024, GVR deputy general director Tran Thanh Phung said. In Q1, the group sold 101,000 tons of rubber with an average selling price of VND36.7 million ($1,470) per ton, VND4.1 million higher than the same period last year. The current price for the popular “type 3L” rubber is VND49 million ($1,960) per ton, up VND12.5 million from beginning of the year, Phung noted.

“Unexpected and unusual rubber price hikes happened because of scarce supply and unfavorable weather in Southeast Asia."

The GVR executive believed that rubber prices will remain high until at least May and June - when the harvest season begins. The group expects an average selling price of VND34-35 million ($1,370-1,410) per ton, up VND2-3 million.

The group’s industrial park segment has faced major legal changes. Do Huu Phuoc, another deputy general director, said the group has received approval to convert about 25,000 hectares of rubber plantation into industrial park land in Tay Ninh, Ba Ria - Vung Tau and Binh Phuoc provinces.

He expected approval mid-April for similar conversions in the provinces of Binh Duong and Dong Nai.

GVR chairman Tran Cong Kha said that a group of state capital representatives will propose a roadmap for divestment of state capital from the group at all levels for consideration in 2026. The valuation of land and member businesses will take a lot of time, he explained.

Kha said the group's focus for 2024-2025 and 2025-2030 will be green growth and sustainable development. It is implementing a forest management plan and has applied for a sustainable forest management certificate for new areas, he said, adding that to date, 120,000 hectares have received such certification.

Closing the Friday trading session, GVR stood at VND33,150 ($1.33) per share.