Brickmakers wait for better months

The brick making industry experienced a poor start to the year, with around 15 listed companies reporting year-on-year profit drops in the first six months. Their hopes are pinned on the upcoming “construction season”, which they hope to reverse their fortunes in the final quarter.

As usual, the construction season will see the demand and prices of construction materials, including bricks and tiles, increase.

In the first half of the year, brick manufacturer Dong Trieu Viglacera Joint Stock Co (DTC) reached VND70.8 billion (US$3.6 million) in turnover, a year-on-year increase of 22 per cent. However, pre-tax profit was down around 4 per cent lower than the corresponding period last year.

Nguyen Quang Mau, chairman of DTC said his company had experienced a number of difficulties in the first half of the year, including prolonged power cuts and logistical issues caused by the construction of National Highway 18.

The reasons

He also cited a lack of workers and an increase in the cost of input materials such as coal and electricity. Despite these setbacks, Mau was still confident high revenue and profit in the remaining months of the year would help his firm realise its annual target. Consequently, DTC has targeted pre-tax profit of VND15.5 billion for the second half.

Although the company only has a charter capital of VND10 billion, DTC has an annual target of VND24 billion in pre-tax profit this year with an estimated dividend of 40 per cent. It reached VND20.5 billion in profit last year with a dividend of 33 per cent.

In early August, Viglacera Tien Son Joint Stock Co (VIT) put into operation the Viglacera Pacific Plant, a granite production facility.

VIT deputy director Truong Ngoc Minh said that his firm would inject an additional VND106 billion into the plant to give it an annual capacity of 1.5 million square metres of granite by the end of this year, increasing to over 3 million square metres in the next few years.

VIT is expected to hit a total revenue of a VND80 billion with a VND5 billion pre-tax profit in the five remaining months of the year.

The profit for the whole year would not be less than VND20 billion, according to Minh.

However not everyone is fairing so well. Thanh Thanh Joint Stock Co (TTC), a tile producing company, reported a first quarter loss of VND1.64 billion and suffered a loss of VND2.04 billion in the second quarter, making its VND4.8 billion target of pre-tax profit an unlikely goal.

Vitaly Joint Stock Co (VTA) suffered five consecutive quarterly losses, including a loss of VND8.3 billion in the first quarter this year, eclipsed in the second quarter with a loss of VND10.9 billion.

According to Dinh Quang Huy, chairman of the Viet Nam Building Ceramic Association (VIBCA), Viet Nam is the largest tile manufacturer in Southeast Asia and ranks sixth in the world with a capacity of about 300 million square metres of tiles per year. However, local producers are struggling to compete with other products smuggled from China.

Huy said that VIBCA recently sent a report to the Prime Minister on the bottlenecks facing domestic companies due to illegally imported products from China.

Under the direction of the Prime Minister, the Ministry of Industry and Trade made a decision in June that tiles imported from China would be subject to a tax of between 20-40 per cent.

Producers are hoping that with renewed efforts combined with support from the State, they will overcome current difficulties and the market will soon stabilise and develop. — VNS

Tags: Vietnam Construction, Vietnam construction sector