Plastic firms report Q2 profit rise amid input price drop

Many plastic enterprises in Vietnam reported increased profit in the second quarter of the year thanks to lower raw material costs.

Binh Minh Plastics Company's (BMP) revenue reached VND1,560 billion (66.68 million) in Q2, up 7% year-on-year. Its profit after tax was 3.5 times higher than in Q2/2021, mainly owning to significant improvement in gross profit margin from 12.9% to 25.1%.

The company attributed the increase in profit to the decrease in the price of plastic raw materials and unchanged selling prices.

Tien Phong Plastic JSC (NTP) also recorded positive business results in Q2. Specifically, revenue increased 38% to VND1,720 billion ($73.51 million). Gross profit doubled to VND504 billion. Profit margin was 29.3%, up sharply from 19.9% Q2/2021.

However, financial expenses and selling expenses both increased sharply. Selling expenses, in particular, quadrupled to VND232 billion.

Vietnam Plastic Corporation (VNP) reported Q2 gross profit margin increasing from 0.45% to 3.6%, and gross profit reaching VND2.4 billion ($103,000), many times higher than the VND316 million in the same period last year.

However, the profit from its joint ventures and associates decreased sharply from VND34 billion to VND11.5 billion, causing the company's net profit to decrease by 46% compared to the same period last year to VND16.4 billion.

Dong A Plastic Joint Stock Company (DAG) announced Q2 revenue increased by 8% to VND633 billion, and net profit was VND5 billion, higher than the VND393 billion in the same period last year. Gross profit margin increased from 4.4% to 5%.

According to Bloomberg data, the price of PVC resin, the main material for making plastic pipes and wires, has gradually cooled after peaking at $1,850 per ton at the end of October 2021. By the end of June, the price fell to $1,000 per ton, down 46% from the peak and to the price range in September 2020, 23% lower than the same period last year.

BVSC Securities believes a favourable PVC price would help Binh Minh Plastics Company's (BMP) H2 earnings increase sharply. Its business leaders said they had no plans to adjust the selling price from now until the end of this year, which means the selling price will remain at a high level after many upward adjustments in 2021.

On the other hand, consumption volume continued to recover thanks to more reasonable steel prices after many adjustments to boost civil construction and infrastructure activities in H2/2022, leading to an increase in demand for plastic pipes.

At the same time, the company plans to increase market share in the central region and Central Highlands with a number of campaigns like free shipping for orders over 50 million and events to introduce products and policies for project customers.

An Phat Holdings (APH) has two main business segments, plastic products and plastic resin trading. Therefore, the decrease in the price of plastic resins in Q2 helped improve the profit margin on packaging, engineering plastics and construction plastics, while the plastic resin trading segment decreased.

The plastic resin trading segment accounted for 62-44% of the group's total revenue, causing the overall gross profit margin to decrease. Specifically, the gross profit margin of the plastic resin trading segment decreased from 6% in Q2/2021 to 2.4%, while the plastic product production segment remained at 19.3%. Overall profit margin decreased from 12.2% to 9.1%.

During the quarter, the group reported a 35% increase in revenue to VND5,080 billion ($217 million), and a slight decrease in gross profit from VND450 billion to VND444 billion. Improved financial performance and reduced losses in joint ventures helped APH's net profit increase by 54% to VND29 billion.