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PetroVietnam Ca Mau Fertilizer Joint Stock Company (PVCFC, DCM ticker symbol - HOSE) achieved unexpected business results in the first quarter of 2022, owing to a sharp increase in the global average selling price of fertilizer products.
Profit in the first quarter increased dramatically
In the first quarter, the parent company estimated Urea equivalent and NPK production volumes at 236,650 tons and 26,400 tons, respectively. In terms of consumption volume, urea accounted for 186,510 tons, urea derivatives accounted for 7,690 tons, and NPK derivatives accounted for 12,280 tons.
Accordingly, DCM's total estimated revenue in the first quarter was VND 4,028 billion, up 111% compared to the same period in 2021. Profit after tax reached 1,515 billion VND, 10 times higher than the same period last year. With the target of reaching VND 1,629 billion in revenue and VND 78.12 billion in profit after tax, in the first quarter of the year, DCM exceeded 147% of revenue target and 19 times higher than profit target.
According to DCM, the first quarter plan was developed using the Company's annual performance data as well as forecasts for input material prices and output product selling prices. As a result, the Company devised a cautious plan. DCM was also concerned that the tensions between Russia and Ukraine would have a negative impact on the global financial market, causing successive increases in oil and freight prices, scarcity of fertilizers and raw materials, and etc.
The war between Russia and Ukraine has skyrocketed domestic fertilizer prices since the end of February until now. Furthermore, countries such as Russia and China's export restriction policy contributed to the global scarcity of fertilizer supply, negatively impacting the price of this commodity.
In addition to the objective factors due to the high selling price, DCM continued to promote its strong internal forces, increase the capacity and maintain stable operation at 112.3% of capacity, reduce material consumption and seek opportunities to export consignments at high prices. The Company's effective exploitation of technological improvements and optimizations helped save energy and reduce costs, creating strong growth of DCM in the first quarter.
In the second quarter, DCM estimates total realized revenue of VND 4,847.7 billion, pre-tax profit of VND 748 billion and profit after tax of VND 710.67 billion. Regarding Urea fertilizer output, DCM will produce 232,160 tons of urea fertilizer and consume 217,000 tons. The Company aims to supply 25,560 thousand tons of NPK and consume 28,500 tons.
Because target areas such as the Southwest, Southeast - Central Highlands, and Cambodia enter the summer-autumn crop, demand is high in the second quarter. Furthermore, due to high input costs, the selling price of domestic products is expected to remain high (gas prices, transportation costs, etc.). In addition, the lack of supply of completely or partially imported products due to insufficient supply by domestic production (DAP, Kali, SA) will help the Company grow revenue and fulfill financial targets in the 2nd quarter of 2022.
Promote all activities in 2022
On April 26, DCM will hold the 2022 Annual General Meeting of Shareholders share several material information to the shareholders.
PVCFC's Board of Management anticipates that the Company will continue to face intertwined challenges and opportunities in 2022. However, with the combined efforts of all employees, DCM will strive to exceed VND 9,060 billion in total revenue and VND 542.1 billion in pre-tax profit compared to the plan at the beginning of the year.
In which, PVCFC aims to produce 860,100 tons of Urea equivalent and 80,000 tons of NPK. In terms of business output, Urea equivalent is expected to reach 770,200 tons, fertilizer products from Urea will reach 80,000 tons and NPK will reach 80,000 tons.
The Board of Management will closely monitor the price and market situation, strengthen analysis and forecast work, and promptly take appropriate management measures, with a particular emphasis on developing the market, distribution systems, and increasing awareness of NPK Ca Mau in target markets, remarkably efficient development in the Southwest market; developing potential customers; enhancing customer's product/service experience to feel and change usage habits, notably for NPK Ca Mau.
Moreover, in this year, DCM will continue to complete transition projects including: conversion and supply of raw CO2, a research and development center and a project to produce complex fertilizers from molten Urea with a capacity of 300,000 tons/year.
Simultaneously, in order to ensure future production expansion and product diversification for long-term development orientation, DCM has planned to invest in wholesale warehouses and micro-organic fertilizer factories - an unavoidable trend in the agricultural industry in the future.
The board of management, in particular, is implementing 5 strategies step by step alongside a team that has mastered the orientation goals and markets. Despite the unpredictability of events, the board of directors has developed numerous response scenarios. As a result, shareholders and investors have the right to hope for a stable, sustainable DCM that adds value to society, community, and, most importantly, end consumers in the near future. Finally, by 2025, PVCFC intends to be a market leader in fertilizer production and trading in
Vietnam and Southeast Asia.