Vietnam's coffee exports are at an all-time high. How do coffee businesses make profits and losses?

Despite unprecedented coffee export figures, many businesses are suffering losses.

At the end of the 2023-2024 crop year, coffee export volume decreased by 11.3% compared to the previous year, but revenue reached a record high of over $5.4 billion. Currently, coffee prices have cooled down compared to previous months but are still about 80% higher than the same period last year.

According to data from the General Department of Customs, in the first nine months of the year, Vietnam's coffee exports reached 1.1 million tons, equivalent to a value of over 4.3 billion USD, a decrease of 11.7% in volume but an increase of 38.7% in value compared to the same period last year.

Despite a decrease in production, thanks to a sharp increase in prices, coffee export revenue surpassed the $4.24 billion mark achieved in 2023, setting a new record.

Thus, at the end of the 2023-2024 crop year (from October of the previous year to September of this year), Vietnam exported a total of 1.47 million tons of coffee, a decrease of 11.3% compared to the previous crop year.

However, export value in the past crop year still increased by 33%, reaching $5.42 billion - the highest in history - driven by export coffee prices that were nearly 50% higher than the previous crop year, averaging $3,673 per ton.

In September alone, the average export price of coffee reached $5,469 per ton – the highest level ever, a 5.8% increase compared to the previous month and a 68.7% increase compared to the same period last year.

In the second quarter of 2024 alone, Thang Loi Coffee achieved revenue of only 99 billion VND, a decrease of 45% compared to the same period in 2023, but after-tax profit reached 19 billion VND, a sharp increase of 1,571%.

Despite record-high coffee export figures, the business performance of coffee companies varies considerably in the 2023-2024 crop year.

Among the profitable businesses is Thang Loi Coffee (CFV), one of the largest coffee companies in Dak Lak . In the first half of 2024, this company recorded after-tax profit of 29 billion VND, an increase of nearly 26 billion VND compared to last year, despite net revenue decreasing by 32 billion VND compared to the same period last year, reaching 265 billion VND.

In the second quarter of 2024 alone, Thang Loi Coffee achieved revenue of only 99 billion VND, a 45% decrease compared to the same period in 2023, but after-tax profit reached 19 billion VND, a sharp increase of 1,571%. According to Thang Loi Coffee, the strong profit increase stemmed from the sudden surge in domestic coffee prices. The company focused on purchasing coffee before selling it, while also reducing costs, contributing to improved business efficiency.

The Vietnam Coffee Corporation (Vinacafe) is also a highly profitable enterprise. According to the company, in the first nine months of 2024, Vinacafe's consolidated total revenue reached VND 1,579 billion; of which, the parent company achieved VND 988 billion, equivalent to 107% compared to the same period last year. Consolidated profit reached VND 10.6 billion; of which, the parent company contributed VND 4.6 billion. Total consolidated tax contributions to the state budget reached VND 63 billion; of which, the parent company contributed VND 13.5 billion.

Vinacafe carried out its production and business tasks in the first nine months of 2024 under conditions of high coffee prices, which presented great opportunities for the Corporation.

At the end of the 2023-2024 crop year, coffee export volume decreased by 11.3% compared to the previous year, but revenue reached a record high of over $5.4 billion.

In contrast to the profitable businesses, many coffee companies are experiencing losses or declining profits. Vinacafé Bien Hoa (VCF) is a company that saw increased revenue but decreased profits.

In the first six months of 2024, Vinacafé Bien Hoa's revenue reached VND 1,072 billion, an increase of VND 63 billion compared to the previous year. However, profit only reached VND 167 billion, a decrease of VND 8 billion compared to the same period. The main reason given is the sharp increase in input material costs, which could not offset the increase in sales.

Phuoc An Coffee Joint Stock Company (CPA) is also a business that saw revenue increase but still incurred losses. Phuoc An Coffee recorded total revenue of nearly 13 billion VND in the first half of 2024, a 66% increase compared to the same period. However, the company still lost nearly 2 billion VND.

Gia Lai Coffee Joint Stock Company (stock code FGL) has not yet generated any revenue and is incurring heavy losses. Gia Lai Coffee reported a loss of nearly 14.3 billion VND in the first six months of 2024 after an audit.

The main reason is that the company has not yet generated revenue from bulk green coffee beans, its primary profit-generating product. The company's coffee harvest only begins from October to December 2024, meaning all of the previous crop's coffee was sold out in 2023.

In addition, rising management and financial costs, coupled with other expenses related to clearing inefficient orchards, have made the company's business situation even more difficult.

Petec Coffee Joint Stock Company (stock code PCF) also experienced a sharp decline in revenue and low profits. In the first quarter of 2024, the company's revenue reached only 10 billion VND, compared to 105 billion VND in the same period last year. After-tax profit reached 37 million VND, a significant decrease from 202 million VND in the same period. The company's shares are currently under warning status. Second and third quarter business results are not yet available.

Minh Khang Capital Trading Public Joint Stock Company (Code: CTP) also had an unfavorable business performance in the first half of 2024. CTP recorded net revenue of nearly 709 million VND. The company incurred a net loss after tax of 178 million VND, compared to a profit of 274 million VND in the first six months of last year. As of June 30th, CTP's total assets reached 152 billion VND, a decrease of more than 40 billion VND compared to the beginning of the year.

Coffee businesses still face a dilemma.

Mr. Luong Tuan Vu, General Director of Gia Cat Loi Commodity Joint Stock Company, stated that, in reality, for many years, whenever coffee prices fluctuate significantly, businesses face difficulties, even bankruptcy.

In the Central Highlands, harvested coffee was previously stored at home, but home storage was prone to mold due to substandard warehouses, and theft was a major concern for growers. Therefore, most farmers consign their harvested coffee to large coffee companies.

However, businesses that receive coffee on consignment from farmers face the headache of warehousing, transportation, storage, and the loss or deterioration of coffee quality. Storing it for too long results in losses due to various costs, while selling it at high prices leaves them with insufficient funds to compensate the farmers for their losses.

Many businesses have struggled to find a solution to this problem. If they don't accept coffee from farmers, they lose their business. But if they do accept it, they have to bear all the costs and still have to figure out the best selling price to make a profit.

It's worth adding that many businesses have used significant financial leverage and borrowed from family and relatives. They only want stable sales to profit from price differences, for example, buying coffee from farmers at 70 and reselling it to traders at 71 or 72 to make a profit, hoping for sustainable growth. However, coffee prices are fluctuating daily.

When businesses use additional leverage by borrowing coffee from farmers to buy and sell for profit, the risk is extremely high.

When businesses use additional leverage by borrowing coffee from farmers to buy and sell for profit, the risk is extremely high.

Currently, both domestic and international coffee markets are highly sensitive to changes in production. Vietnam's coffee production for the new crop year is likely to continue to decline due to unfavorable weather conditions.

Moreover, Vietnamese coffee exporters are currently struggling with financial pressure, product shortages, and higher shipping costs, making them more cautious when accepting new orders.

Coffee prices remain high, but issues such as financing, transportation costs, and product shortages continue to be a major headache for many coffee exporting businesses.

Mr. Le Duc Huy, General Director of Simexco DakLak (2/9 Dak Lak Import-Export Company Limited), shared that this year the company will reduce its export volume by about 15% compared to last year (from the target of 115,000 tons to 100,000 tons).

Coffee prices are fluctuating, and businesses lack sufficient funds to purchase during peak periods, leading to the need to reduce production. In particular, they must tighten control over their supply to manage risks and avoid economic losses, only selling to international partners when they have sufficient stock. Furthermore, the 2024-2025 crop year is likely to see crop failure due to drought, so businesses are being extremely cautious in their operations...

Source: https://danviet.vn/xuat-khau-ca-phe-cua-viet-nam-cao-nhat-lich-su-doanh-nghiep-ca-phe-lam-an-lo-lai-the-nao-20241016121402317.htm