Seafood sector feeling the bite amid high inflation
Seafood sector feeling the bite amid high inflation
Seafood businesses saw a plunge in their first quarter (Q1) business results amid weakening global demand, after reaching a peak in Q2 of last year.
Statistics from the five major listed seafood firms, Vinh Hoan Corporation (VHC), Nam Viet JSC (ANV), International Development and Investment JSC (IDI), Minh Phu Seafood Corporation (MPC), and Sao Ta Foods JSC (FMC), show that in the first quarter of this year these firms saw 23.4 per cent drop in revenue, and an 80.4 per cent plunge in profit, on average compared to Q1/2022.
MPC, Vietnam’s largest shrimp producer, saw its revenue drop by almost half last quarter to $92.28 million, and after-tax losses of $4.27 million, compared to a $3.96 million profit for the same period last year. This is the first quarter that MPC has reported a loss since the company went public in 2017.
Vietnam’s largest exporter of basa fish, VHC, posted $96.5 million in revenue, down 32 per cent on-year, and a $9.5 million profit, a dip of 60 per cent, with the gross profit margin ratio falling sharply from 23.8 per cent to 17.3 per cent.
Seafood exporters are under mounting pressure in the face of reduced consumption in the export market and a sharp fall in prices.
At IDI, Q1 revenue fell 5.9 per cent on-year to $76.6 million, but its profit tumbled 91.3 per cent to just $761,300, and its gross profit margin ratio slid from 16.3 per cent to 8.2 per cent.
Figures from the Vietnam Association of Seafood Producers and Exporters show that in April, seafood exports dropped sharply by 28 per cent on-year to just $810 million.
Seafood exporters are under mounting pressure in the face of reduced consumption in the export market and a sharp fall in prices, meanwhile firms are incurring escalating production costs in the domestic market.
By the end of April, the total value of Vietnam's seafood exports for the year so far exceeded $2.6 billion, down 31 per cent on-year. Exports to the US market were down 57 per cent to $418 million, and Chinese exports fell by 37 per cent to $435 million. Other major markets such as South Korea and Japan all saw negative growth compared to a year ago.
The situation is not expected to improve over the next few months, but Viet Dragon Securities' forecast suggests the demand for basa fish in the US market will resume in Q3 after the current inventory sells out.
The weakening demand from almost all of Vietnam’s major seafood export markets comes from inflation pressures, meanwhile, local seafood firms had been pinning their hopes on the gradual reopening of the Chinese market since the start of the year. However, the latest figures from the first four months of 2023 seem to reflect continued weakening demand from China.
