General Director of Minh Phu Seafood Corporation Lê Văn Quang said that the second half of the year will be a hard time for the shrimp market due to inflation, disease outbreak, and the weather. This will make Minh Phu Corporation face the risk of failing some business criteria.
Disease outbreak, inflation, weather
General Director of Minh Phu Seafood Corporation Lê Văn Quang said: “The disease outbreak in shrimp farms is more complicated than it was in the past. Due to constant rain, farmers had to carry out early harvest and reduce the stocking. The high inflation in countries will pose bigger challenges into the shrimp market”. In his opinion, the quantity of exported shrimp and export value may be lower than the plan, but profit “will surely be made”.
Minh Phu sets a target of exporting 64.600 tons, valued at USD 796 million in 2022.
The Corporation aims to earn nearly VND 19,000 billion revenue (equal to USD 817 million), and VND 1,266 billion profit after tax (equal to USD 54.6 million).
In the first five months, Minh Phu exported as many as 20,342 tons of shrimp, valued at USD 266.4 million, up 8.64% and 25.27% respectively as compared to the same period last year. Thus, after nearly half of the year, the Corporation has achieved just one-third of the goal of these two criteria.
Minh Phu has achieved 60-65% of the goal of profit and 86% of the net revenue.
The US will not be the first priority
When it comes to the biggest importer, the US, Quang is not really optimistic: “Minh Phu will face lots of difficulties in the US market, thus, the Corporation may achieve or just almost reach the goal of quantity. However, I believe that the Corporation will attain the goal of profit this year”.
According to VASEP, the shrimp export to the US started to slow down in May with the growth rate accounting for just 2.8% as compared to the same period last year. The Corporation had seen a growth rate of 25-61% in the first four months of the year.
In 2021, the US accounted for 34% of the density of Minh Phu’s sales, up 8.6 percentage points from 2020.
The US has been a challenging market as Minh Phu has been always facing anti-dumping lawsuits.
Quang said that the Corporation aims to reduce the density of sales to the US market irregardless of the reduction of anti-dumping duty by 0%. The duty may drop by some percentages, however, costs of exportation to the US increase dramatically, especially logistics. Freight charges from Vietnam to the US increased even ten times, up to 20,000 USD/TEU, as compared to the time before the pandemic. Meanwhile, Ecuador has been exporting shrimps to the US at cheaper prices and freight charges from Ecuador to the US are much cheaper than Vietnam due to the geographical advantage.
Expectation of the Kiên Giang Seaway project
Despite disadvantages, Minh Phu is holding expectations of the Kien Giang Seaway project. This may be considered one of vital factors that decide whether or not Minh Phu will achieve their profit plan.
The Kien Giang Seaway system has been invested by Minh Phu for two years with over VND 2,800 billion capital. The project aims to contribute to the sustainable development of the industrial shrimp culture sector, especially hi-tech shrimp farming of the Tứ Giác Long Xuyên area.
According to the plan, the project involves two phases. The first one was supposed to be completed in 2021, and the second one will be finalized by the end of June 2025.