Amidst the overall gloomy economic conditions faced by manufacturers in both local and international markets, a few businesses are showing positive signs of growth, managing to navigate through challenges to expand their operations.
Rare bright spots
While the prevailing economic picture is mostly discouraging, there are a few rare bright spots, particularly in the real estate, construction materials, and logistics sectors.
Despite the difficulties experienced by the real estate and construction markets, the industrial plastic sector, including small-sized enterprises, has also faced similar challenges, leading many of them to suspend or sell their businesses due to intense competition. However, Binh Minh Plastics (BMP) stands out as an exception with positive business results. During the first quarter of the year, BMP achieved net revenue of VND1,440 billion, a 6.7% increase compared to the same period last year. Its consolidated profit reached over VND554 billion, representing a significant rise of 73.8%.
Similarly, while many real estate companies are facing difficulties that have led to business closures, some property firms have recorded net profit growth in the last quarter. Sunshine Homes (SSH), for example, recorded a growth rate of 409% compared to the same period last year. The company achieved over VND508 billion in net revenue, a significant increase from the modest figure of VND88 billion in the previous year. Its after-tax profit reached VND270.4 billion, representing a sharp rise of 409%. During the first quarter, Sunshine Homes achieved 71% of its annual profit target.
An Duong Thao Dien JSC (HAR) reported a 40% year-on-year increase in revenue, reaching VND14.8 billion. Its after-tax profit was VND11.77 billion, 16 times higher than the profit from the same period last year. According to the company, the strong growth in profit was a result of receiving dividends from its investment in G Homes, reducing the loan burden through bond redemption, and increased revenue from financial activities.
Kinhbac City Group (KBC) also gained significant growth, achieving VND2,223 billion in net revenue, which is three times higher than the same period last year. Its after-tax profit was VND1,056 billion, doubling the figure from the previous year.
Logistics companies are currently facing unprecedented challenges, with dramatic declines in imports and exports over the past few months. Despite these hardships, some logistics companies managed to achieve positive business results in the first quarter.
For example, Viet Nam Tanker Joint Stock Company (VTO) made VND14 billion in profit in the first three months, which is 7.3 times higher than the same period last year. Petrolimex Joint Stock Tanker Company (PJT) achieved net profit of VND6 billion, a ten-fold increase compared to the previous year, by rationalizing goods transport routes and operating longer and two-way routes, resulting in increased output and revenue.
Flexibility and determination yielding results
Phu Nhuan Jewelry Joint Stock Company (PNJ) achieved VND12,059 billion in revenue in the first four months of the year and maintained an after-tax profit of VND859 billion, equivalent to the same period last year. This is a commendable business result considering the difficult economic situation, especially since jewelry is considered a non-essential product. According to PNJ, despite a sharp drop in consumer demand for luxury items, the company continuously generated new business ideas, adopted effective market approaches, expanded its market share, and managed to minimize the decline in revenue from jewelry retail to just 5.7% in the first four months compared to the same period last year.
Nguyen Dang Hien, general director of Tan Quang Minh Manufacture and Trading Co., Ltd. (Bidrico) revealed that the food and foodstuffs industry, although essential, could not shield itself from the eroding impacts of inflation and military conflicts in some parts of the world. As a result, many enterprises in this sector experienced declines in sales and profits during the first months of the year.
However, Bidrico achieved remarkable year-on-year growth of 20% from January to April. In addition to maintaining its market shares in South Korea, Japan, and Southeast Asia, the company increased exports to the U.S. and China by transitioning towards green growth. Hien emphasized the importance of returning to healthy, nutritious, natural, and green products, which led to business growth in both local and international markets.
Similarly, Nguyen Anh Tuan, deputy general director of Colusa – Miliket Foodstuff Joint Stock Company, stated that besides exporting instant noodles to major markets such as the U.S., Japan, and South Korea, the company also expanded its sale of rice products to European markets. From January to May, the company’s revenue from exports to 30 countries and territories grew by 30% year-on-year.
Tuan said that the company’s exports were chosen by many international markets due to its focus on improving product quality and packaging. For instance, Miliket instant noodles use quality packaging paper from Japan. In the coming period, the company plans to utilize plasma technology from the medical sector to enhance product pasteurization.
In the food and vegetable industry, Nguyen Dinh Tung, general director of Vina T&T Group, reported a 26-27% surge in exports during the first four months compared to the same period last year. While China remains the company’s major buyer, Vina T&T Group has been actively boosting exports to other discerning markets such as the U.S., the EU, Japan, and South Korea.
Tung highlighted the importance of meeting the specific requirements of each market, as different markets have varying criteria and rules for fruit import. The reopening of China and its increased consumer demand for essential food and foodstuffs after the pandemic contributed to the export growth of Vina T&T Group.
Vietnam’s accession to free trade agreements (FTAs) with many countries and regions has facilitated easier access to international markets for fruit exporting businesses. Moreover, Vietnamese fruits are preferred due to their superior quality, flavor, and safety compared to products from other countries in the region.
However, there is a need to redefine the branding of Vietnamese agricultural products. Tung emphasized that product quality is a fundamental aspect of building a strong brand. Businesses should establish sufficiently large planting areas and preliminary processing stations at the planting site to prevent quality loss and product shrinkage during transportation, rather than solely relying on factories and acquiring products from various planting areas.
To mitigate issues during transportation and minimize losses for enterprises, Vina T&T Group has opened an office in the U.S., enabling them to promptly address arising challenges.
Overcoming challenges for a promising future
Compared to other businesses, pharmaceutical companies have experienced relatively fewer impacts from the current challenging situation, with some enterprises reporting strong sales and profit growth in the first quarter. These businesses have implemented various development strategies to achieve such positive results.
Imexpharm witnessed growth of a remarkable 53% in consolidated net revenue in January-March compared to the previous year, amounting to VND479 billion. The company’s after-tax profit also surged by 48% to reach VND78 billion. The company’s revenue growth in the first quarter can be attributed to its market expansion and post-pandemic market recovery. Imexpharm also restructured its product offerings and focused on high-value products with increased profit margins.
Similarly, Bidiphar achieved significant growth in the first three months by changing its business structure and boosting the sales of pharmaceutical products. The company’s total sales rose by 15%, and its net profit reached VND68 billion, a nearly 34% increase year-on-year.
DHG Pharmaceutical Joint-Stock Company had a successful business quarter, generating revenue of VND1,229 billion, a 15% increase compared to the same period last year. The company’s gross profits also surged by 22% to VND614 billion due to lower capital costs. After deducting all costs, DHG earned VND361 billion in profit, a 41% increase over the previous year’s figure.
DHG’s focus on selling its main products such as antibiotics, pain relievers, and antipyretics contributed to the company’s 21% increase in revenue. Profit margins improved due to the company’s initiatives in boosting material storage and finished product availability to meet market demand.
Although some businesses have achieved good results in the first few months, many experts predict that exports will continue to face challenges throughout the rest of the year. The global economic downturn, high inflation, and potential risks are expected to worsen the business situation, leading to a further decline in total consumer demand for exports. To navigate these difficulties, enterprises must continue to enhance their capacity.
While some exports still heavily rely on the Chinese market, developed countries in Europe have become more selective, setting up barriers based on green criteria, sustainable production, and environmental impact reduction. Furthermore, in large markets like the U.S. and countries that have signed FTAs with Vietnam, exporting businesses are likely to face trade remedies investigations due to the ongoing global economic hardships and declining consumer demand.
In light of these challenges, enterprises have urged the Ministry of Industry and Trade to boost promotion activities in new markets, and Vietnamese trade representative offices in various countries are expected to provide more support for enterprises in terms of market connectivity and information on tariffs and technical barriers, enabling businesses to quickly adapt to the evolving situation.
Source: The SaigonTimes