Gold traders say not expectant of bullion trade this year
All local gold traders said they were not expectant of the bullion trade this year although the trade of gold bars brought about high profits in 2010.
Traders said they did not target high profits from the bullion trade this year due to the unpredictability of global gold prices and the local policy towards this precious metal, although certain international traders have predicted the gold price to increase by some 15% in 2011.
Nguyen Thanh Long, general director of Saigon Jewelry Company (SJC), observed that the U.S. economy is on the recovery path, and therefore, many investors would not choose gold as a safe-haven asset but would be ready to take risks in other investment channels.
Gold bar trade was the core business of SJC last year, generating a pre-tax profit of about 372 billion dong, or 13% higher year-on-year. However, the company this year scaled down its bullion trade profit to 350 billion dong due to downbeat predictions about the bullion trade.
Long said that his company was shifting more to jewelry making by building a large-scale jewelry workshop.
Similarly, Phu Nhuan Jewelry Company (PNJ) as the leading jewelry maker and trader on the local market also holds a downbeat view on the gold bar trade.
Nguyen Thi Cuc, deputy general director of PNJ, told that business conditions were less favorable than last year’s due to numerous macro-economic issues such as interest rates and foreign exchange rates. Furthermore, Cuc said, it is more difficult to predict movements of the gold price, so the company barely raises its revenue and profit targets for bullion trade.
Last year, PNJ obtained total sales of over 13 trillion dong, or some US$660 million, and an after-tax profit of 206 billion dong, a year-on-year increase of 17.3%. PNJ will continue to focus on jewelry trade as its strength, targeting a 15% increase in both sales and profit. The company will open a jewelry shop in Danang City on Wednesday and will open several more in the coming time.
At Sacombank Jewelry (SBJ), the profit target for 2011 is reduced to 30% year-on-year compared to last year’s growth rate of 130%. Nguyen Ngoc Que Chi, general director of the company, said that she expected gold bar sales to increase 50% compared to the targeted growth rates of 700% and 300% in revenues from gold quality assessment and jewelry trading. – SGT
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