In 2022, fertilizer production enterprises enjoyed favorable factors such as many European production plants having to close because of a sharp increase in gas prices and high demand for fertilizer from foreign markets.
However, according to the aggregated data of Investing.com, by the beginning of February 2023, the trading price of urea futures contract fell to 382 USD/ton, the lowest since the beginning of May 2021 and down 43.3% over the same period in 2022.
In a recent report on the fertilizer industry, SSI Research forecasts that urea prices may fall in 2023 due to the recovery of exports from Russia and China, which means input costs for urea production (coal and natural gas) will decreas and demand for urea will be weakened.
Meanwhile, the supply of urea is in excess. The fertilizer supply for the winter-spring crop of 2022 - 2023 from the 4 factories of Vietnam Oil and Gas Group (PVN) and the Vietnam Chemical Group (Vinachem) has reached 2.5 million tons/year, while domestic demand is only about 1.6-1.8 million tons/year.
From the fourth quarter of 2022, when fertilizer prices in the world market decreased continuously, the export of fertilizers was no longer as favorable as before, so the competitive pressure in the domestic market will be great.
Normally, fertilizer prices will be in line with world oil and gas prices. However, since the end of 2022, although oil and gas prices have not increased, fertilizer prices have continuously decreased, while slow sales at low prices have put pressure on inventories for businesses.
Recently, Russia announced a plan to cut oil production by an estimated 500,000 barrels per day, equivalent to 5% of output, causing oil prices to immediately skyrocket. Analysts fear that this move by Russia may affect oil and gas prices, leading to an increase in input materials for fertilizer production.
According to the Ministry of Industry and Trade, in the coming time, the fertilizer market will still have complicated and unpredictable changes in price and supply, especially the price of potassium fertilizer provided by Russia and Belarus, accounting for nearly 50% of the total demand of the world. Meanwhile, for this type of fertilizer, Vietnam is completely dependent on imports.
In addition, SSI Research and Agriseco Research share the same opinion that the fertilizer industry will be less positive when China opens up the market, creating competitive pressure for domestic enterprises with goods from this country.
Mr. Phung Ha, Vice President and General Secretary of the Vietnam Fertilizer Association, said that China's opening is not a decisive factor in the operation of fertilizer enterprises. The price of fertilizer depends on the price of ammonia which depends greatly on the price of gasoline, if the price of petrol is high, the price of fertilizer also has similar developments.
Petrovietnam Fertilizer & Chemicals Corporation (DPM) is the leading company in the Vietnamese fertilizer industry, dominating the urea fertilizer production market with nationwide distribution networks.
In 2022, DPM’s revenue reached VND 18,627 billion, up 45.7% compared to 2021 while its financial revenue reached VND 365 billion, more than double the same period.
As a result, in 2022, DPM's pre-tax profit was VND 6,646 billion; EAT was more than VND 5,606 billion, up 76.8% compared to 2021.
As of December 31, 2022, DPM had VND 1,575 billion in cash equivalents and VND 305 billion in demand deposits at banks. In addition, the company also had a term deposit of VND 7,080 billion (more than double at the beginning of the year).
Recently, DPM has announced its business plan for 2023 with total revenue expected to reach VND 17,372 billion; down 10% compared to the same period last year.
In 2022, the price of DPM fertilizer stock increased by more than 90% from VND 34,500 to VND 50,300/share, thereby showing a growth rate that investors can consider for long-term investment.
PetroVietnam Ca Mau Fertilizer Joint Stock Company (DCM) is a nitrogenous fertilizer production enterprise, under the Vietnam Oil and Gas Group. With a capacity of 800,000 tons/year, the company has contributed to the transformation and restructuring of nitrogen fertilizers in Vietnam.
In 2022, the revenue and NPAT of DCM reached a record high of VND 16,380 billion and VND 4,281 billion, respectively, up 1.62 times and 2.34 times compared to 2021.
With excellent business results, at the end of December, the company adjusted the target of the main production and business plan in 2022. Accordingly, the enterprise adjusted to increase the target of total consolidated revenue for the whole year by 60% to VND 14,525 billion.
Binh Dien Fertilizer JSC (BFC) is currently one of the largest NPK fertilizer manufacturers in Vietnam. BFC owns 5 factories with a designed capacity of nearly 975,000 tons/year, of which the factory in Long An province has the largest capacity, about 500,000 tons/year.
In 2022, Binh Dien Fertilizer recorded revenue of VND 8,579.06 billion, up 10.8% over the same period and profit after tax of VND 186.83 billion, down 37% compared to the same period last year.
It is known that for 2022, the company set a total revenue of VND 6,427.62 billion and pre-tax profit of VND 200 billion. Thus, by the end of 2022 with pre-tax profit of VND 235 billion, the company completed 117.5% of the year's profit plan.
For 2023, BFC sets a business plan with a revenue of VND 7,476.5 billion and a pre-tax profit of VND 220 billion. Thus, it is estimated that the profit plan in 2023 will decrease by 6.4% compared to the implementation in 2022.
As of December 31, 2022, the total assets of Binh Dien Fertilizer increased by 11.3% compared to the beginning of the year to VND 4,289 billion. In particular, inventory was VND 2,333.8 billion, accounting for 54.4% of total assets; fixed assets were VND 746 billion, accounting for 17.4% of total assets; short-term receivables were recorded at VND 564.2 billion, accounting for 13.2% of total assets.
In addition to the three companies mentioned above, the list of the largest fertilizer companies in Vietnam also includes Lam Thao Fertilizers And Chemicals JSC and South-West PetroVietnam Fertilizer and Chemicals JSC whose revenue all reached over 3,000 billion VND in 2022.
Henry Tran – VietnamCredit