Navico accelerates diversification strategy in wake of COVID-19 losses

An Giang, Vietnam-based pangasius firm Nam Viet Joint Stock Company (Navico) has undertaken plans to diversify its business operations, a move that has been accelerated by the economic impact of the COVID-19 pandemic.

Navico suffered in 2020 as sales plunged 23.2 percent from 2019, dropping to VND 3.44 trillion (USD 148.9 million, EUR 123.1 million), and its net profit dropped 71.3 percent to VND 202 billion (USD 8.8 million, EUR 7.2 million). Sales of frozen pangasius products accounted for 63.9 percent of its total sales value last year, grilled pangasius sales accounted for 10.2 percent of the total, material pangasius comprised 9.3 percent of the company’s total sales, and feed sales were 9 percent of overall sales.

“The COVID-19 pandemic has negatively affected our sales, causing prices to go down last year,” the company said in its annual report.

The company’s difficulties have continued in 2021. In the year’s first quarter, Navico saw its sales value decline 13 percent year-on-year to VND 706 billion (USD 30.6 million, EUR 25.3 million). However, its net profit rose 47 percent to VND 63.8 billion (USD 2.8 million, EUR 2.3 million).

Navico initiated a diversification strategy before the pandemic. In 2019, it invested VND 23.2 billion (USD 1 million, EUR 830,500) in a 50 percent stake in a facility that produces collagen and gelatin from pangasius bones. Once complete, the plant will have a production capacity of 780 metric tons (MT) per year. The project is shovel-ready but construction has not begun yet, Navico said in its 2020 annual report.

But the COVID-19 crisis has hastened the company’s efforts to revitalize its business. As part of its restructuring scheme, in the first quarter of this year, Navico sold all of its shares in local Maritime Bank, worth VND 115.3 billion (USD 5 million, EUR 4.1 million).

In July 2020, the company established a wholly-owned subsidiary, Nam Viet Organic Fertilizer Limited, with charter capital of VND 5 billion (USD 216,470, EUR 179,000). The plant will use pangasius manure and unused parts of pangasius to produce 70,000 MT per year of organic fertilizer products.

The company also spent VND 477 billion (USD 20.7 million, EUR 17.1 million) to install rooftop solar panels on its farms and plants. The installations are already finished, and generated a revenue of VND 8 billion (USD 346,340, EUR 286,380) last year. Navico aims to invest further in solar energy initiatives in the future, aiming to eventually produce 650 megawatts of solar power per year.

Though pursuing plans to diversify its portfolio, the company still put priority on its core business. Last year, Navico continued to invest in Binh Phu, its biggest farm in Mekong Delta. The company operated 64 hatchery ponds and 229 farming ponds at Binh Phu in 2020

Navico said having full control of its own supply chain has helped mitigate negative impacts caused by the COVID-19 pandemic. The company’s feed factories are able to produce 1,000 MT of feeds per day, meeting all of its feed demand. Its farms can also supply sufficient material, about 1,000 MT per day, for its three processing plants in the region. Navico currently exports its products to more than 100 countries, giving it a plethora of markets to target – a strength has COVID-19 has ebbed and surged in various parts of the world over the past year.

This year, Navico said it is confident it will increase its sales and profits. The focus for the company in 2021 will be the minimization of its costs, the improvement of the quality of its products, and the pursuit of market expansion, it said.

The company has set a 2021 goal of VND 4.5 trillion (USD 194.8 million, EUR 161.1 million) of sales, which would represent an increase of 30.8 percent from 2020. It has set its goal for profit before taxes at VND 450 billion (USD 19.5 million, EUR 16.1 million), 87.5 percent higher than last year.

Navico was not the only pangasius exporter that faced headwinds last year. Another major exporter, Vinh Hoan, also saw its sales value fall 10.5 percent to VND 7.04 trillion (USD 304.8 million, EUR 252 million) in 2020.

Overall, Vietnam’s pangasius export value slid 25.5 percent to USD 1.49 billion (EUR 1.23 billion) as sales to most major markets, including – China, the U.S. and the European Union – tumbled.

Photo courtesy of Navico