Workers in a processing plant of Vĩnh Hoàn Corporation. For Vĩnh Hoàn Joint Stock Company, orders in the third quarter of 2023 are gradually improving compared to the second quarter of 2023 in terms of consumption volume. — Photo courtesy of Vĩnh Hoàn Joint Stock Company

HÀ NỘI — Seafood exporters will start to record improved profits in the second half of 2023 thanks to lower costs, including lower input prices and reduced transportation costs.

Regarding input materials, the prices of raw shrimp and fish, accounting for 20 per cent of the cost of goods sold (COGS), decreased by 9 per cent and 4 per cent respectively over the same period last year, while the price of aqua feed remained high.

The average price of aqua feed peaked in May 2023 at VNĐ14,900 per kg and feed companies only started reducing the price from June 2023. Thus, the price of aqua feed in the first six months of 2023 was still 8 per cent higher than in the same period last year.

As feed prices account for 60 per cent of COGS, coupled with a decline in the industry's average selling price in the first half of 2023, analysts from SSI believe that most manufacturers in the industry have witnessed margins and profits may have bottomed out in the first half of 2023.

SSI analysts said although the prospect of orders to the US and China is still uncertain due to the slow recovery of the economy and high inventory levels, companies dealing in seafood export will start to see the profit margins improve in the second half of 2023, thanks to lower raw material and aqua feed costs, and lower transportation costs.

According to Vietcombank Securities Company, port congestion has been gradually cleared since January 2023. The occupancy rates at ports in North America and Northern Europe are no longer as high as they were at the end of 2022.

Waterway freight rates are still maintaining low levels compared to the peak of the COVID-19 epidemic season. With the ships and containers being oversupplied, Việt Nam's seafood exports to Western countries will be more positive in 2023.

SSI expects businesses that export to the US market such as Vĩnh Hoàn Joint Stock Company (VHC) to record a slight decrease or flat profit in the third quarter of 2023. Nam Việt Joint Stock Company (ANV) also benefits from being exempted from US anti-dumping duty this year.

For Vĩnh Hoàn Joint Stock Company, according to the management of this business, orders in the third quarter of 2023 are gradually improving compared to the second quarter of 2023 in terms of consumption volume. SSI expects net revenue and net profit in 2023 to reach VNĐ11 trillion and VNĐ1.3 trillion, respectively, down 17 per cent and 34 per cent compared to the same period in 2022. In 2024, SSI expects that net income and net profit will increase sharply.

For Nam Việt Joint Stock Company, SSI estimates net revenue and net profit in 2023 at VNĐ4.9 trillion, up 1 per cent and VN465 billion, down 31 per cent, respectively. However, SSI estimates that net sales and net profit will rebound strongly in 2024, as exports will begin to recover by the end of the fourth quarter of 2023 or the beginning of 2024.

With Sao Ta Food Joint Stock Company (FMC), SSI estimates net revenue in the first six months of 2023 at VNĐ2.1 trillion, down 25 per cent year-on-year. In June 2023, export turnover of shrimp increased sharply with revenue of VNĐ442 billion, up 1 per cent over the same period last year and 71 per cent compared to the previous month, close to the peak in 2022.

SSI expects Sao Ta Food Joint Stock Company's revenue to recover from the second half of 2023.

Lê Hằng, communications director of the Việt Nam Association of Seafood Exporters and Producers, said that in addition to the difficulties caused by weak consumption demand, shrimp and pangasius producers and exporters suffered a decrease in profits because the prices of feed, seed and input costs all increased, while the selling prices decreased, leading to higher inventories.

Forecasting the next few months, she said the main export markets of Vietnamese seafood such as the US, EU, China, and Japan will continue to be affected by inflation and inventory issues.

Demand from these markets is expected to increase in the second half of the year. However, inflation in many markets has not shown any signs of cooling down, which inhibits the recovery of their seafood consumption and import demand.

According to SSI, in June 2023, Việt Nam's seafood export turnover was estimated at US$800 million, down 21 per cent over the same period last year; in which, shrimp exports reached $341 million, down 18 per cent compared year on year, but up 3 per cent month on month, and pangasius exports reached $156 million, down 26 per cent year-on-year and 2 per cent less than the previous month's figure.

Shrimp exports in the first half of 2023 reached $1.6 billion, down 31 per cent over the same period last year, and pangasius exports reached $885 million, down 38 per cent.