Rubber firms report positive Q3 performance
Rubber firms report positive Q3 performance
A price surge in the third quarter (Q3) has helped rubber companies to gain significant revenue and profit after years of struggling with low prices.
On October 28, Dak Lak Rubber Investment JSC (DRI) announced its Q3 financial report, showing substantial business growth.
The company’s Q3 net revenue reached $5.9 million, up 53 per cent on-year. Increased financial revenue, combined with reduced financial expenses, further boosted the company’s profits.
By the end of Q3, DRI's post-tax profit amounted to $1.7 million, four-fold higher than one year ago, marking the company's highest quarterly profit since 2018.
In the first nine months, DRI achieved around $3 million in post-tax profit, already exceeding its full-year profit target.
Explaining this performance, DRI noted that rubber latex prices rose sharply in Q3, and additional revenue from durian sales had contributed to a sharp jump in its revenue and profits.
For many years, sluggish rubber prices forced companies to reduce rubber plantation areas and diversify into other sectors to sustain operations.
As of the end of September, international RSS3 and TSR20 rubber prices rose by 83 per cent and 55 per cent on-year, respectively, due to extreme weather conditions.
The RSS3 (rubber smoked sheet) and TSR20 (technically specified rubber) are two key rubber types traded in the international market.
This development has had a positive impact on Vietnam’s rubber export prices, with the average export price in September reaching $1,697 per tonne, up 30 per cent on-year, and the average export price reaching $1,588 per tonne, up 19 per cent.
As a result, Vietnam's total rubber export value in the first nine months surged 12 per cent, despite a 6 per cent drop in export volume.
Meanwhile, Phuoc Hoa Rubber JSC (PHR) reported $1.35 million in Q3 post-tax profit, a substantial increase compared to last year’s profit of a little more than $29,000.
During the period, its net revenue reached $13.2 million, up 12 per cent. PHR attributed the profit growth to increased latex prices, which boosted its gross profit by more than $562,000. Additionally, PHR received cash dividends from Geruco Song Con Hydropower JSC.
Meanwhile, Tay Ninh Rubber JSC (TRC) saw its nine-month net revenue rise by 28 per cent, alongside higher financial and other income, resulting in a post-tax profit of $3.04 million, more than five-fold the profit of the same period last year, setting a record since 2024.
TRC achieved $4.2 million in post-tax profit compared to a mere $83,000 profit in the same period of last year, already surpassing its full-year profit target of $2.9 million.
Analysts at MB Securities (MBS) said that Vietnam's rubber export prices are likely to remain high through the end of the year due to supply shortages and rising demand driven by China's implementation of numerous economic support policies and reduced rubber plantation areas owing to land conversion.
The Association of Natural Rubber Producing Countries continues to raise its forecast for a shortage in natural rubber supply this year.
In 2024, global rubber supply growth is forecast at a low rate of 0.4 per cent due to unfavourable weather during the transition from El Niño to La Niña and widespread leaf fall disease, which negatively impacts rubber yield and quality.
Additionally, rubber growers in several countries, including Thailand, Indonesia, and Malaysia, are not yet ready to expand their planting areas.
Meanwhile, global rubber consumption is expected to grow by 2.3 per cent, supported by recovering demand in China as the country enacts various policies to stimulate economic growth.
Major producing countries are converting rubber plantations to other purposes, which will support higher rubber prices in the long term.
