Tire producer Casumina sees fluctuating profits before leaders' arrests

Southern Rubber Industry JSC (Casumina) saw its profit fluctuating and falling to below VND100 billion ($3.93 million) from 2017-2023, just before its leaders were arrested for state asset management violations.

The cash dividend rate has also plunged from over 20% before 2016 to 3-5% since 2017.

Casumia, a subsidiary of state-owned chemical giant Vinachem, was established in 1976. It was one of the country's two leading tire producers, and is listed on the Ho Chi Minh Stock Exchange (HoSE) as CSM. It was ranked 61st among 75 global tire companies in 2023.

The company attributed its decreasing profit to objective factors such as falling domestic demand, fierce competition from cheap products from China and Thailand, fluctuations in raw material prices, and increased loan interest costs.

In recent years, Casumina has maintained debts of about VND2 trillion ($78.58 million), accounting for 50% of its total capital. Every year it pays more than VND100 billion in interest expenses, or 20% of gross profit. In 2023 alone, interest costs soared 33% year-on-year to VND153 billion ($6 million).

This year, Casumina has targeted VND5.02 trillion ($197.25 million) in revenue, down 9% compared to 2023, and VND80 billion ($3.14 million) in pre-tax profit, up 14%. In particular, domestic revenue is forecast to continue declining while exports will become the main earner.

In the first quarter of the year, the firm recoded VND1.22 trillion ($47.94 million) in revenue, down 6% year-on-year, and VND20 billion ($785,856) in net profit, an increase of 177%. With these results, the company achieved 24% and 30% of its year revenue and profit targets, respectively.

On Wednesday, three incumbent and former leaders of the company were detained for "violating regulations on management and use of state assets, causing loss and waste" per the Penal Code. They are CEO Pham Hong Phu, former chairman Bui The Chuyen, and deputy CEO Nguyen Minh Thien.

Their arrests came after the Ministry of Public Security's investigative agency (C03) launched legal proceedings against Casumina and related units.

C03 is expanding its investigation into the case and applying legal measures to recover assets for the state. Casumina has yet to announce replacement personnel. However, it said it is willing to coordinate with relevant parties to support the investigation, and will take measures to protect the legal rights of the company, customers, relevant partners, and shareholders.

Following the arrests, the company’s stock, CSM, hit its floor price on Thursday at VND17,400, and fell by nearly 6% to VND16,400 ($0.64) on Friday.