Something unprecedented in history is happening to cement industry enterprises

The cement industry is facing the most difficulty in its 120 years of operation when consumption and export of cement and clinker decline, input costs increase, many factories have to produce moderately or stop kilns…

That is the opinion of Mr. Dinh Quang Dung, Chairman of the Board of Directors of Cement Joint Stock Company Vicem Ha Tien (Code: HT1) at the 2024 Annual General Meeting of Shareholders taking place on April 24.

Vicem Ha Tien organizes the 2024 Annual General Meeting of Shareholders

According to statistics from the Vietnam Cement Association (VNCA), from 2022 until now, cement consumption has continuously decreased, causing difficulties for cement production enterprises.

Currently, the country has 61 cement factories, with a total capacity of about 117 million tons of cement/year, but cement consumption in 2023 will only reach about 87.8 million tons.of which domestic cement consumption reached 56.6 million tons, exports 31.2 million tons.

Total cement and clinker products consumed in 2023 decreased by 11.9% over the same period. In particular, domestic cement consumption is only 84% by 2022, leading to extremely fierce competition in the domestic cement market.

Vicem Ha Tien leader said, Declining consumption causes inventories to increase, causing some factories and lines to reduce productivity or stop production.

The cause of the above situation is that the domestic real estate and construction market has not shown signs of recovery, works and projects are slow to be implemented, have to be postponed, delayed, and the speed of disbursement of public investment capital. slow.

In addition, scarcity and increased prices of construction materials affect construction progress in many regions, especially in the Central and Southwest regions, leading to a sharp decline in domestic cement demand.

Cement exportclinker encountered difficulties, prices dropped sharply due to reduced import demand from China and Bangladesh, had to compete with excess supply in the Middle East, Southeast Asia and due to the production protection policy of the Philippine government.

Commenting on 2024, Vicem Ha Tien leaders said that there are still potential risks from the world economic environment. The real estate market is expected to recover but cannot yet be vibrant again. Domestic cement demand is unlikely to grow high because the disbursement of public investment capital in localities is still slow.

Difficulties and problems related to legal procedures, finance, land, site clearance… need time to be resolved and handled. Domestic electricity prices are forecast to continue to increase.

“This is a difficult time for Vietnam’s cement industry and Vicem Ha Tien. To overcome these difficulties requires us to have drastic, proactive and flexible solutions; There needs to be sympathy, companionship, and cooperation from shareholders, customers and partners,” Vicem Ha Tien Chairman shared.

Binh Phuoc Cement Factory

In a difficult market context, Vicem Ha Tien said it had to balance production and consumption to reduce inventory (reducing clinker kiln productivity, stopping kiln 1 Kien Luong from June 27, 2023); Research and implement plans to produce and sell new Power Cement products…

Accordingly, clinker production output in 2023 will reach 3.81 million tons, down 15.8% over the same period. Cement production (including outsourcing) reached 5.39 million tons, down 19.2% over the same period. Total product consumption reached 5.8 million tons, equal to 88% of the plan, down 19% over the same period.

Vicem Ha Tien’s total revenue reached 7,055 billion VND, down 21% over the same period; Profit after tax reached 17.7 billion VND, down 93% over the same period, the lowest level in the past decade of the business (since 2014).

This year, this cement manufacturer targets total revenue to decrease slightly by 0.3% to VND 7,032 billion. However, profit after tax target increased by 29% to 23.2 billion VND.

Regarding construction investment, Vicem Ha Tien will focus on implementing and completing raw material mine projects; Projects that utilize kiln exhaust heat to generate electricity. At the same time, strive to put the BOT Phu Huu road project into operation and collect tolls.