Profits tumbling for Vietnam’s exporters as US abandons pangasius

Published on
October 23, 2019

Vietnam’s pangasius exporters are struggling as shipments to the United States and other potential markets have drastically slowed in 2019.

September was the seventh month in a row that saw Vietnam’s pangasius export value fall from the equivalent time period one year ago, according to data from Vietnam Association of Seafood Exporters and Producers (VASEP). Overall, the Southeast Asian country exported pangasius products worth USD 156.7 million (EUR 140.7 million) in September, falling 14.6 percent year-on-year.

While Vietnam’s pangasius shipments to China have risen 37.5 percent to USD 60.8 million (EUR 54.6 million) thus far in 2019, making China Vietnam’s largest pangasius market, the increase has failed to lift the overall export value of the sector. Sales to the U.S., the largest buyer of Vietnamese pangasius last year, have collapsed, dropping 57.3 percent year-on-year to USD 20.46 million (EUR 18.4 million) in September.

Overall value of Vietnam’s pangasius exports in the first nine months of 2019 fell 8.5 percent to USD 1.46 billion (EUR 1.31 billion). China accounted for 30.9 percent of the total export value, with USD 450.7 million (EUR 404.5 million), up 19.6 percent from the same period in 2018. In second place the U.S., which accounted for 14.3 percent of total value – USD 208.3 million or EUR 187 million, down 43.6 percent year-on-year.

And while exports to the European Union have risen 7.3 percent in value in 2019 to 13 percent of total value, or USD 189.3 million or EUR 169.9 million, that gain has been offset by a yearlong weakening in exports to Mexico, Brazil, and Colombia, which exporters previously described as having high potential for uptake of pangasius. VASEP said the decline is expected to continue through the end of 2019.

Vinh Hoan, Vietnam’s largest pangasius exporter, has struggled thus far in 2019. In September, it exported pangasius worth USD 22 million (EUR 19.7 million), down 22.7 percent from August 2019. In a 19 October statement, the company attributed the poor performance in export value in the month to its lower sales in China.

September was the third month in a row that Vinh Hoan’s export value fell month-on-month, and its net profit has fallen significantly so far in 2019. The company earned a net profit of VND 254 billion (USD 10.9 million, EUR 9.8 million) in the third quarter of this year, a drop of 58.3 percent year-on-year.

“The decline in the net profit result in the third quarter is attributed to the lower sales volumes and prices,” Vinh Hoan said in a report sent the Ho Chi Minh Stock Exchange, without providing further details.

In the first nine months of 2019, the company logged total net profit of VND 981 billion (USD 42 million, EUR 37.7 million), down 5.3 percent from the same period last year.

Its sales in the third quarter were VND 1.88 trillion (USD 80.6 million, EUR 72.3 million), 25.5 percent lower year-on-year. Between January and September, Vinh Hoan registered sales of VND 5.696 trillion (USD 244.1 million, EUR 219.1 million), down 13.3 percent from a year ago.

But Vinh Hoan said the company experienced a small recovery in its U.S. export value in September compared to August due to market stabilization and anticipation for the holiday seasons. CEO Nguyen Ngo Vi Tam had told SeafoodSource during Vietfish 2019 in late August the company is hoping pangasius export prices begin to rise starting in October due to less production and higher demand centered around the holiday season.

Vinh Hoan is not the only Vietnamese pangasius exporter which experiencing a net profit decline. CL-Fish Corp., also based in the Mekong Delta, said 12 October it earned VND 19.2 billion (USD 820,000, EUR 740,000) of net profit in the third quarter, down 80 percent year-on-year, mainly because of falling sales value and export prices.

Another major exporter, I.D.I Seafood, said in August its net profit fell 29 percent to VND 226 billion (USD 9.7 million, EUR 8.7 million) in the first six months of this year because it had signed contracts to buy material from local farmers while prices were up earlier this year. Since that time, they have experience a sharp decline, the company reported.

Nam Viet Joint Stock Company, or Navico, was spared from losses, as it saw its net profit in the third quarter grow to VND 152.8 billion (USD 6.6 million, EUR 5.9 million), up 34 percent year-on-year. The company is seeking approval from American authorities to make a return to the U.S. market after ceasing exports to the U.S. in 2014. Its most important market now is China.

The U.S. Department of Commerce (DOC) recently announced the U.S. will remove the antidumping duty imposed on pangasius products from Vietnam in its preliminary review of the 15th period review (POR15) for the period from 1 August, 2017, to 31 July, 2018.

A local industry expert with knowledge of the matter cautioned SeafoodSource earlier this week the preliminary results should be seen as a reference only, because the D.O.C.’s final ruling may change significantly. The picture for pangasius exports this year, therefore, is possibly not as bright as in 2018, the expert added.

Photo courtesy of Nam Viet Joint Stock Company/Navico

Reporting from Hanoi, Vietnam

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