Vietnam's leading quartz stone manufacturer braces for impact of US tariffs

Vicostone JSC, a global manufacturer of quartz stone, will consolidate its intrinsic strengths and maintain cautious management this year to navigate the global economic volatility, especially the ongoing tariff storm from the U.S.

U.S. President Donald Trump on April 2 said he would levy 46% tariffs on imports from Vietnam as part of a new wave of global impositions, effective from April 9. The 46% rate for Vietnam is among the highest, only after Laos (48%) and Madagascar (47%).

However, Trump on Wednesday dropped his reciprocal tariffs for countries reaching out to the U.S. to negotiate to 10% for 90 days. The 90-day reprieve is applied to nearly 90 nations except for China.

The tax issue took center stage at Vicostone’s AGM on Thursday, as the U.S. accounts for a large share of its annual export revenue.

Vicostone (HNX: VCS), a member of Vietnamese multi-sectoral corporation Phenikaa, generated 74.3% of its net revenue from exports last year.

At the meeting, Vicostone chairman Ho Xuan Nang presented response scenarios sketched out by the company. In a worst-case scenario, a 46% tariff on Vicostone’s products could slash revenue from the U.S. market by up to 50%. Under a more favorable outlook, if revenue holds steady, profit could still fall by 30-40%.

According to Nang, if the tariff rate is limited to 10%, the impact would be noticeable but not critical, allowing the company to take timely adjustments to adapt.

“We need to closely monitor global economic developments, especially the U.S. economic outlook, as it will directly affect market size and purchasing power,” he said. “While Vicostone is capable of adapting, profit margins will inevitably be squeezed.”

Therefore, enhancing internal management efficiency, controlling costs, and optimizing operations will be key to navigating this challenging period and sustaining long-term performance, the company’s executive said.

Nang noted that as China faced high tariffs in the U.S. and expanded its overseas investments, particularly in Vietnam and other countries over the past five years, competition in the engineered stone industry has intensified.

Vicostone’s export to the U.S., which once accounted for around 80% of its total stone export revenue, has dropped to about 25%.

“The U.S. market is still expanding in size, but intensifying competition has led to disproportionate growth,” the Vicostone chairman said. “India has emerged as Vietnam’s main competitor in the engineered stone segment, offering products at average prices around 40% lower than Vicostone’s”.

Against the backdrop, Nang said, Vicostone’s objective is not to maintain absolute market share at all costs, but to ensure business efficiency and a reasonable profit margin.

Vicostone does not compete on price with rivals, he said, stressing the company has invested in human resources, technology, and modern management systems to deliver differentiated values.

In 2024, Vicostone achieved net revenue of VND4.32 trillion ($167.71 million) and pre-tax profit of VND953 billion (36.99 million), reaching 93.91% and 92.21% of the year's targets, respectively.

At the Thursday AGM, shareholders approved a business plan for 2025 with net revenue of VND4.71 trillion ($182.85 million), up 9.2% from the previous year, and pre-tax profit of VND975 billion ($37.85 million), up 2.3%.

Vicostone aims for sustainable growth based on sound financial pillars, proactive risk management, strategic market development, and the promotion of ESG (environmental, social, and governance) initiatives.

With the goal of stabilizing its supply chain, the company plans to leverage its advantage in localization and take control of over 95% of its input materials, increasing self-sufficiency in sourcing.

It will also seek new suppliers while proactively selecting higher-quality, more stable, and long-term input materials at optimal costs, in alignment with both its short-term plans and medium- to long-term business strategy, heard the meeting.

The plan to acquire the Phenikaa Chemical Plant project from its parent company, Phenikaa Group, to secure input materials was also approved at the shareholders' meeting.