Minh Phu Seafood Group Joint Stock Company (MPC) has just announced the documents for its 2023 annual general meeting. Minh Phu is a leading enterprise in the field of shrimp farming and export, often referred to as the "king of shrimp".
Despite its strong position, most of Minh Phu's production and business indicators have declined compared to 2022. The target production volume and export value for 2023 are projected at 45,000 tons and $540.5 million respectively, representing decreases of 30% and 13% compared to 2022.
In 2023, Minh Phu Seafood planned for revenue of nearly VND 12,790 billion, a decrease of approximately 22% compared to the previous year. Net profit after tax decreased by 23% to VND 639 billion.
Amidst sluggish seafood exports, MPC's business results declined in the first quarter of 2023. Revenue was only half of the same period last year, reaching 2,123 billion VND, equivalent to 17% of the annual plan. Minh Phu reported a net loss of 98 billion VND.
MPC stated that, in addition to the impact of declining sales revenue, the business results of Minh Phu Loc An, Minh Phu Kien Giang commercial shrimp farming companies and Minh Phu Ninh Thuan shrimp hatchery company were unfavorable. Inventory accounted for nearly 50%, equivalent to VND 4,741 billion.
Similarly, Vinh Hoan Corporation (VHC) – the pangasius export giant led by businesswoman Truong Thi Le Khanh – reported first-quarter profits less than half of the same period last year. According to its Q1 2023 financial report, the company recorded revenue of VND 2,221.58 billion, a 32% decrease compared to the same period last year, and after-tax profit of VND 218.98 billion, a 60% decrease compared to the same period last year. The gross profit margin also sharply decreased from 23.8% to 17.3%.
The main reason is the decline in exports to key markets, especially the US market. In March alone, exports to the US market were at 393 billion VND, down 40% compared to the same period last year; while in February they were 197 billion VND, down 69%.
Previously, in 2022, Vinh Hoan achieved revenue of VND 13,230 billion. After-tax profit reached VND 1,975 billion, exceeding the plan by VND 230 billion in revenue and VND 375 billion in profit. Despite a decline in the last quarter of the year, the US remained Vinh Hoan's largest market, with pangasius fish revenue exceeding USD 248 million.
In 2023, Vinh Hoan set a business plan with revenue of VND 11,500 billion, a decrease of 13.1% compared to the same period, and expected after-tax profit of VND 1,000 billion, a decrease of 49.4% compared to the actual performance in 2022.
Another seafood company, Nam Viet Joint Stock Company (ANV), showed clear signs of declining growth in its first quarter of 2023 due to inflation. ANV's net revenue and after-tax profit reached VND 1,155 billion and VND 92 billion respectively, a 56% decrease compared to the same period last year. As of March 31st, ANV's inventory amounted to VND 2,666 billion, accounting for 47% of the company's total assets.
In 2021, China accounted for 22% of ANV's total revenue. However, by 2022, due to the impact of the country's Zero Covid policy, revenue from China had decreased by 27% compared to 2021 and accounted for only 11% of total revenue.
In 2022, ANV recorded revenue and profit of VND 4,897 billion and VND 674 billion respectively.
Encountering difficulties
According to a report by VNdirect Securities, the seafood industry is facing numerous challenges. Weakened seafood consumption demand due to high inflation and high inventory levels are among the reasons affecting US seafood imports in the short term. High inventory levels in this market have led importers to reduce or halt new orders in the final months of 2022 and into early 2023.
Seafood exports to the Chinese market have not met expectations. In the first four months of 2023, seafood export revenue to China reached only $364 million, a 30% decrease compared to the same period last year, due to a sharp decline in key export items such as shrimp and pangasius.
Vietnamese shrimp products face strong competition from Ecuador and India, whose strengths lie in frozen, small-sized, and inexpensive shrimp. Regarding pangasius exports, the value of exports to the Chinese market decreased sharply by 68% year-on-year in the first four months of the year.
VNdirect believes that, due to weak demand from key export markets and high production costs, listed seafood export companies in the industry, especially pangasius companies, have set more cautious business plans compared to 2022.
Meanwhile, shrimp exporting businesses are somewhat more optimistic about their 2023 business results, expecting both revenue and profit to increase compared to the same period. However, given the challenges facing the shrimp industry, VNdirect believes that the businesses' plans are quite ambitious.
Faced with these difficulties, seafood businesses are seeking new directions. Mr. Le Van Quang, General Director of Minh Phu, said that this year, the company is focusing on three major projects: the new breading factory of Minh Phu Hau Giang Company, the new processing plant of Minh Phat Company, and the seawater pipeline project in Kien Giang by a high-tech company, with the goal of expanding production and improving the quality of each Minh Phu product on the market.
In addition, Minh Phu is also developing and perfecting high-tech models for farming tiger shrimp in mangrove forests, extensive tiger shrimp farming, semi-intensive tiger shrimp farming, tiger shrimp-rice farming, intensive whiteleg shrimp farming, and super-intensive whiteleg shrimp farming, suitable for each region, with low costs comparable to India by 2030 and Ecuador by 2035.
Ms. Truong Le Khanh, Chairwoman of Vinh Hoan, stated that in 2023, the company added two new business segments: aquatic feed products and fruit and vegetable products. By entering the feed processing sector, Vinh Hoan has completed a sustainable supply chain for pangasius fish.
By adding fruits and vegetables to its product portfolio, Vinh Hoan hopes to develop a wider variety of processed food products combining seafood and agriculture to provide nutritious and convenient meals for consumers worldwide.
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