Minh Phu expects Q2 profit to rise 30 percent on rising self-supply

Minh Phu Seafood is hoping its net profit will increase significantly in the second quarter due to a higher self-supply of material.

Minh Phu’s net profit in the second quarter of 2019 fell 66.2 percent year-on-year to VND 74 billion (USD 3.2 million, EUR 2.9 million), mainly owing to a shortage of material, forcing it to purchase higher-priced material for processing.

But its profit over the April-June period is expected to surge 30 percent from last year, as Minh Phu was able to harvest more of its own shrimp from the company’s major farms at Minh Phu Loc An in Ba Ria-Vung Tau Province and Minh Phu Kien Giang in the Mekong Delta province of Kien Giang. Its rising self-supply has relieved pressure on purchases of high-priced material in the region, Minh Phu Chairman and CEO Le Van Quang told SeafoodSource on 22 May.

Quang said in early April that many foreign buyers, especially those from the retail and online shopping sales, came back with several orders following a slump in demand in the first quarter.

Between January and March, Minh Phu earned a net profit of VND 55.09 billion (USD 2.35 million, EUR 2.14 million), 31.5 percent lower than the first quarter of 2019. Its sales dropped 15.4 percent to VND 2.84 trillion (USD 121 million, EUR 110 million) in the period.

Quang attributed the declines to impacts from the COVID-19 pandemic, which caused many of the company’s customers in major markets to postpone or cancel orders in February and March.

“Our business results in the second quarter will rebound to offset the decreases in the first quarter,” Quang said.

In a meeting on 21 February, Minh Phu’s board of directors approved a plan to produce 63,000 metric tons (MT) of shrimp, set a target of USD 709 million (EUR 646.6 million) in export value, and earn a profit-before-tax of VND 1.37 trillion (USD 58.4 million, EUR 53.2 million) this year. But it clarified that the company had not taken into account impacts from the COVID-19 outbreak at the time the goals were set.

Minh Phu is planning to hold its 2020 annual stakeholders meeting in June, during which, growth targets are likely to be adjusted to account for the impact of the pandemic.