Vietnam's livestock giants report severe loss in Q1

The livestock segment of Hoa Phat Group, BaF Vietnam, Hoang Anh Gia Lai and Dabaco Group reported serious losses in the first quarter of 2023 due to difficulties in the market and surging interest expenses.

While its steel segment recovered, Hoa Phat Group's agricultural segment, which involves pig raising and chicken egg producing, suffered a loss of VND117 billion ($4.99 million) in Q1. This is a record loss since the group stepped into the agriculture sector in 2015, marking its second consecutive quarter of loss.

In the quarter, Hoa Phat, Vietnam's largest steel producer, signed a contract to supply clean chicken eggs to the chain of WinMart supermarkets. On average, each month, Hoa Phat Phu Tho Poultry Co. Ltd. will provide about 500,000-550,000 clean chicken eggs through distribution agents.

In Hanoi, Hoa Phat, listed on the Ho Chi Minh Stock Exchange (HoSE) as HPG, is supplying clean chicken eggs to more than 100 supermarkets and shops. Every day, about 50,000-60,000 eggs enter the entire supermarket system of WinMart, Coop Mart, BRGMart, minimart Haprofood/BRGMart, and BRGIntershop. Hoa Phat chicken eggs are also supplied to the supermarket system of K.Mart/T.Mart.

Meanwhile, BAF's revenue fell 47% to VND816 billion ($34.8 million) in Q1. The quarter saw a surge in loan interest, from VND4 billion to more than VND22 billion ($937,600), leading to a loss of VND3 billion ($127,850).

Thanks to the revenue from asset liquidation, BAF still earned after-tax profit of nearly VND4 billion ($170,470), down 95.5% year-on-year and a record low profit.

BAF is the pig breeding segment of entrepreneur Truong Sy Ba, listed on the HoSE in 2021. The company has strongly invested in the pig segment over the past two years. The average output has reached 280,000 pigs per year.

In February, the World Bank’s investment arm IFC became a strategic partner in the Vietnam-based company following an investment of $39 million. This investment is part of IFC Agribusiness’ African Swine Fever (ASF) Regional Recovery Program.

The financing, equal to VND900 billion, is for a convertible bond and a VND300 billion senior bond, both for IFC. Vietnam’s State Securities Commission approved BAF’s private placements for IFC on February 20.

According to its Q1 consolidated financial statement, agriculture major Hoang Anh Gia Lai JSC (HoSE: HAGL) recorded a net revenue of VND1.7 trillion ($72.3 million), up 111% year-on-year. In the revenue structure, the livestock industry brought in VND563 billion ($24 million), a sharp increase of VND369 billion ($15.7 million). On average, HAGL sells pigs for VND6.25 billion ($266,000) per day.

No specific profit is recorded from pigs, but HAGL said it expected the pig segment is unprofitable in 2023 though the pig price is recovering. It was not profitable in Q1, according to chairman Doan Nguyen Duc.

Meanwhile, Vietnam's leading livestock company Dabaco reported a loss of VND321 billion ($13.68 million) in Q1, a record loss in the firm's history, while in the same period last year it made a profit of VND9 billion ($383,500).

The corporation (HoSE: DBC) earned net revenue of VND2.31 trillion ($98.6 million), down 18% year-on-year, according to its financial statement. In the revenue structure, semi-finished products accounted for 94% of total revenue, followed by sales of trade, supermarkets, hotels and restaurants.

Dabaco said the economy in Q1 was negatively affected by the post-Covid-19 period and the risk of a global recession. "The agriculture industry in general and the livestock industry in particular face many difficulties due to disease outbreaks among livestock, especially African swine fever, which continues to recur."

In addition, the cost of raising livestock increased while purchasing power decreased. The selling price of products in the market remained low for a long time, leading to a sharp decrease in the results of livestock production among its subsidiaries over the same period.