Vietnam rice exporters see Q1 profit drop due to interest expense

Trung An Rice reported a sharp profit drop in the first quarter of this year, while other major rice exporters Loc Troi Group and Angimex posted losses due to high interest expense.

Trung An High-Tech Agriculture JSC recorded after-tax profit of VND8.5 billion ($362,300) in Q1, down 68% year-on-year. The company earned net revenue of VND897.5 billion ($38.25 million), down 6%, according to its consolidated financial statement.

The company said that Q1 profit decreased mainly due to interest expenses reaching VND33.5 billion ($1.4 million), up 95% compared to the same period last year.

Pham Thai Binh, general director of Trung An Rice, told The Investor that his firm has signed many contracts for rice delivery to South Korea, Malaysia, Singapore, Europe, Australia and the U.S. from now until the beginning of Q2/2023. The total volume is nearly 1,500 containers, or 30,000 tons, mainly high quality and fragrant rice.

"Given the export contracts and current high rice price, the company is confident to fulfill the year's profit target," he said.

Binh added that this year, Trung An aims to promote its strength in the high-quality rice segment, focusing on major markets like Europe and Americas, and enhance sustainability and stability in farming linkages.

In 2023, Trung An Rice expects a revenue of VND3.8 trillion ($161.97 million), flat compared to 2022, and after-tax profit of VND110 billion ($4.69 million), up 33%.

On the Hanoi Stock Exchange, the TAR share price was VND15,100 ($0.64) per unit at Friday's closing.

In the opposite direction, Loc Troi Group JSC (LTG), a leading agricultural services and food corporation in Vietnam, posted a loss of VND82 billion ($3.5 million) in Q1, while in the same period last year it made a profit of VND184 billion ($7.84 million).

The company recorded net revenue of VND2.35 trillion ($99.95 million), up 4% year-on-year. Notably, its interest expenses increased 2.7 times to VND105.5 billion ($4.5 million) in the period.

Loc Troi, registered on the unlisted public company market as LTG, is targeting an after-tax profit of VND400 billion ($17 million) in 2023, up 3% year-on-year.

The firm has 23 subsidiaries and one associate company. The production and trade of food and rice accounted for 54% of its revenue in 2022, while production of plant protection drugs made up 37%.

The LTG share price hit VND28,500 ($1.21) at Friday's closing session.

Meanwhile, An Giang Import-Export Company (Angimex) recorded net revenue of VND159 billion ($6.78 million) in Q1, down 84%.

The company incurred a loss of VND17.8 billion ($758,700) in the quarter due to fixed interest and management expenses, while it made a profit of nearly VND10 billion ($426,300) in the same period last year.

In 2023, Angimex expects revenue of VND4.01 trillion ($170.97 million), an increase of 11.2% compared to 2022, and pre-tax profit of VND10 billion ($426,300).

At the extraordinary general meeting on December 29, 2022, Angimex said that after its chairman Do Thanh Nhan was prosecuted from April 2022, the company's financial situation faced many difficulties.

The Ho Chi Minh Stock Exchange (HoSE) decided to put the AGM shares of Angimex on warning from May 12 due to late submission of its 2022 audited financial statement by more than 30 days.

On the HoSE, the AGM share price hit VND5,460 ($0,23) per unit at Friday's close.

According to the Ministry of Agriculture and Rural Development, in April 2023, export turnover of agricultural products reached $2.33 billion, up 24% compared to April 2022. In which, rice had the highest rise of 54.5%, recording export turnover of $1.56 billion and average export price of $526 per ton, up 7.6% year-on-year.

The average export price of rice in Q1 was $531 per ton, up 9.2% year-on-year, the highest in 10 years.

The Vietnam Food Association forecasts that Vietnam's rice exports in Q2/2023 will maintain a positive growth momentum. In particular, due to the impact of economic and political uncertainties and the increased demand for food reserves among countries, the export price of rice would remain high.

Typically, markets like the Philippines, Indonesia and some African countries are planning to import rice in large quantities to expand food reserves. Meanwhile, rice supply from India and Pakistan continues to be limited, and Thai rice prices increased due to appreciation of the baht.

"In a situation of extreme changes, with food shortages in Europe and Americas, Vietnam's rice industry has great opportunities not only in 2023, but also in the next few years," said Binh, general director of Trung An Rice.