Construction enterprises have reported divergence in the first half of 2021 as a sharp increase in raw material prices has put them under pressure.

Steel currently accounts for roughly 20 per cent of the input costs.

In the first half of this year, the prices of many construction materials continuously increased to record highs, steel alone recorded a rise of 40 per cent. The price of cement with the composition of coal, electricity, gasoline, gypsum and additives also climbed from VNĐ30,000-40,000 per tonne.

The rising prices were attributed to a decline in demand caused by miners facing many difficulties amid the COVID-19 pandemic, a fragmented production chain and China’s policy of cutting steel production to protect the environment.

A number of contractors had to temporarily suspend and stop construction of projects to wait for steel prices to drop to avoid losses.

In the second quarter and the first half of 2021, many construction companies listed on the stock market recorded a decline in earnings while some others achieved impressive business results thanks to cost reductions and diversification.

Coteccons Construction Corporation (CTD), traded on the Hồ Chí Minh Stock Exchange, reported Q2 revenue of VNĐ2.55 trillion (US$111 million), down 36 per cent over the same period last year.

Deducting the cost of goods sold, the company earned VNĐ135 billion in pre-tax profit, only half of that in 2020. As a result profit margins decreased to 5.2 per cent. Administrative expenses continued to record sudden increase from VNĐ70.7 billion to VNĐ122 billion, which, according to CTD’s, was due to the pre-payment of expenses payable to employees.

Deducting expenses, CTD’s after-tax profit was VNĐ45 billion in the second quarter, down 71 per cent over the same period last year. Except for the loss in the fourth quarter of 2020, this is the company’s lowest quarterly profit in recent years. In the first half of 2021, CTD reported an after-tax profit of only VNĐ99 billion, down 65 per cent, fulfilling less than 38 per cent of the profit target.

In the market, CTD stock is on an upward trend, trading around VNĐ63,000 per share.

Ricons Construction Investment JSC announced second-quarter revenue of VNĐ1.83 trillion, an increase of 10 per cent over the same period last year. However, cost of goods sold rose significantly, thereby causing pre-tax profit to decline 27 per cent year-on-year to VNĐ70 billion. In addition to the pressure of rising raw material costs, the company’s administrative expenses also soared 49 per cent to more than VNĐ42 billion.

As a result, the second quarter’s after-tax profit decreased by 44 per cent to VNĐ33 billion. In the first six months of 2021, Ricons achieved VNĐ3 trillion in revenue. Deducting expenses, the company reported a 38 per cent decrease in after-tax profit to approximately VNĐ57 billion.

On the positive side, Hoà Bình Construction (HBC) in the second quarter achieved net revenue of VNĐ3.18 trillion, up 8 per cent. The higher cost of goods sold caused a decrease in pre-tax profit of 17 per cent, down to VNĐ195 billion.

But financial activities saw revenue soaring 7.5 times higher than the same period last year, reaching more than VNĐ65 billion, mainly from nearly VNĐ51 billion from the transfer of investments. The second-quarter after-tax profit jumped to nearly VNĐ66 billion, nearly 35 times higher than the second quarter of 2020.

HBC’s revenue in the first half of the year reached nearly VNĐ5.4 trillion. Deducting expenses, the company reported an after-tax profit of more than VNĐ73 billion, 5.6 times higher than the same period in 2020.

Thanks to its wind power projects, FECON Corporation (FCN) achieved six-month revenue of VNĐ1.34 trillion and after-tax profit of VNĐ50 billion, up 12 per cent and 39 per cent, respectively over the same period in 2020. In the second quarter, FCN reported an after-tax profit of VNĐ35 billion, up 66 per cent year-on-year.

In 2021, the company expects revenue to reach VNĐ3.9 trillion, profit after tax of VNĐ175 billion. Thus, in six months, the company has completed 27 per cent of revenue and 29 per cent of profit targets for the whole year.

Hưng Thịnh Incons Joint Stock Company (HTN) also recorded impressive results in the first half with revenue up 2.5 times higher than last year, reaching VNĐ1.7 trillion. Pre-tax profit soared by 399 per cent to approximately VNĐ145 billion, the gross profit margin reached 8.5 per cent.

It reported after-tax profit of nearly VNĐ83 billion in the second quarter, nearly 46 times higher than the same period last year.

In the first six months, HTN achieved VNĐ2.9 trillion in revenue and VNĐ120 billion in after-tax profit, up 66 per cent and 3.3 per cent year-on-year, respectively.

Source: vietnamnews