Iran-Israel conflict to drive up fertilizer prices: Petrovietnam Ca Mau Fertilizer exec

The CEO of Petrovietnam Ca Mau Fertilizer JSC (PVCFC) has revealed that the orders the company received have surpassed its production capacity, signaling continued positive performance in the second half of the year and confidence in meeting the full-year targets.

PVCFC, a subsidiary of state-owned Petrovietnam, listed on the Ho Chi Minh Stock Exchange (HoSE) as DCM, held its 2025 AGM of shareholders on Monday in the southern province of Ca Mau. During the meeting, shareholders approved the 2025 business plan, 2024 profit distribution plan, investment strategies, and expansion into new business sectors.

H1 pre-tax profit 21% higher than the whole year's target

At the event, the board of directors presented a 2025 business plan that projects slightly lower performance than the previous year.

The company is targeting total revenue of VND13.98 trillion ($536.4 million), roughly equivalent to 2024's actual figure. Expected pre-tax profit is VND864 billion ($33.11 million), a 43% decrease, and after-tax profit of VND774 billion ($33.15 million), down 37.2%. The planned dividend payout is set at 10%.

According to Van Tien Thanh, board member cum general director, pre-tax profit in H1 is estimated at VND1,047 billion ($40.17 million), exceeding the year's target by 21%.

He described this as a strong indicator for the remainder of the year. Despite anticipated challenges, the leader is optimistic that the company can achieve record profit in 2025.

Addressing shareholder enquiries about why the business plan is often set well below actual results, Thanh cited two key reasons: market uncertainties and the need to ensure a secure wage fund for employees.

He noted that while the company sets conservative targets at the start of the year, it regularly adjusts them upwards later to reflect actual business performance.

Under the profit distribution plan, the company has allocated an additional 20% of the excess profit (above plan) to employee bonuses and welfare.

Fertilizer prices to rise amid global tensions

Shareholders also raised concerns about the impact of global tariffs and the Iran-Israel conflict on fertilizer prices. Thanh acknowledged the rapidly evolving global situation, describing it as sometimes shifting “at a 90-degree turn.”

He highlighted that U.S. trade policies are still under negotiation. The outcome could significantly affect global trade dynamics, driving deflation and influencing oil and gas supply and demand. Recent oil prices have fluctuated sharply, dropping to as low as $61-64 per barrel.

However, the Iran-Israel conflict has reignited tensions in the Middle East, driving oil prices back up to $74 per barrel, with some experts predicting prices could surge to $100 or even $120.

Thanh warned that prolonged conflict would likely impact gas supply and oil transportation through the Gulf region, which accounts for 20% of global oil production.

Rising oil prices inevitably push up gas prices, which in turn affect fertilizer production costs. He recalled how, in 2022, oil prices surged due to the pandemic and the Russia-Ukraine war, sending fertilizer prices soaring to nearly $1,000 per ton.

While a repeat of that extreme scenario is unlikely, Thanh expects fertilizer prices to rise again in the near future. He pointed to two main drivers: increasing gas prices and growing demand amid constrained supply.

Earlier this year, China reopened fertilizer exports, but domestic prices quickly rose. As a result, Chinese authorities intervened with stricter customs inspections, which curbed export volumes. This initially drove down fertilizer prices in Q1, but prices have since stabilized and started to climb.

Exports from the Baltic region and the Middle East remain limited. Meanwhile, India recently issued a tender for 2.5 million tons of fertilizer for its west coast and is planning another 1 million-ton tender for the east coast next month - further indicating rising demand.

Robust domestic supply and expanding export strategy

Domestically, with four operational plants, supply is stable and even exceeds local demand. PVCFC and other companies have leveraged this surplus to boost exports. Typically, domestic demand is weaker in Q1 and Q3, prompting the company to actively pursue export opportunities.

As of now, PVCFC has already received orders that exceed current production capacity. If all deliveries proceed as scheduled, inventories may even fall into negative territory. This is a strong signal for the company’s performance in H1. The CEO expressed confidence that output targets for H2 will not only be met but may be exceeded.

Diversifying into dairy industry

In 2024, PVCFC posted revenue of VND14.04 trillion ($538.72 million), a 3% increase year-over-year, with after-tax profit climbing 27% to VND1.23 trillion ($47.19 million).

Based on these results, the board of directors proposed and shareholders approved a 20% dividend payout, equivalent to approximately VND1,059 billion ($40.59 million).

At the meeting, the company leadership also announced plans to diversify into two new sectors: landscaping services and dairy product processing.

This move is part of a broader strategy to expand beyond fertilizers amid limited growth opportunities in this core industry.

With ongoing urbanization and rising living standards, demand for landscape care and maintenance services is on the rise. Currently, the company operates urban agriculture stores that offer a wide range of products, including fertilizers, biological agents, agricultural goods, and agricultural input materials.

As part of its strategic development, the company plans to expand its offerings to include comprehensive solutions and consulting services for urban greenery and landscaping. These will include tree maintenance, urban garden design consulting, and related services aimed at enhancing urban environments.

At the same time, the board of directors recognizes a growing consumer preference for healthy, eco-friendly food options, particularly the increasing shift from animal-based to plant-based products.

In response to this trend, the company will expand its investments into production, processing and trading post-harvest - specifically in fruit-based beverages and nut milks using advanced technology.

This expansion not only aligns with evolving consumer preferences but also helps the company diversify its product portfolio, tap into the rapidly growing nutritional beverage market, boost revenue, build sustainable competitive advantages, and establish a solid foundation for long-term growth.

According to the CEO, the company is actively partnering with experienced industry players to develop these new ventures. The strategy involves building a comprehensive post-harvest technology value chain that includes five key stages, namely developing cultivation areas, harvesting, preservation, and fresh export; processing and deep processing; brand creation, marketing, and market penetration; and establishing a logistics system.

On the HoSE, DCM shares closed Wednesday at VND36,400 ($1.4) apiece.