Tiếng ViệtIn July, Vietnamese wood industry enterprises began to receive orders again, serving the year-end furniture shopping season of the world market.
The lack of orders caused wood processing factories to reduce capacity, labor, and even pay for premises and factories, causing many wood industry enterprises to “struggling”, business results seriously decreased in the first half. year 2023.
However, analysts said, export orders for furniture wood began to return from the end of the second quarter of 2023, although not yet recovered strongly.
According to DSC Securities Joint Stock Company (DSC), in the first months of the year, the impact of both policy and inflation and global growth slowed down, especially in the US and EU markets (two export partners). main import of Vietnam) causing a sharp decrease in export turnover in general and products such as wood in particular.
More specifically about the wood segment, in the first 2 quarters of the year, the export turnover of wood and wood products reached more than USD 6.067 billion, down 27.8% over the same period last year. However, it can be seen that the export situation has improved when the average export value of wood and wood products in the second quarter increased by 15% compared to the first quarter, DSC said.
According to the data of the Ministry of Agriculture and Rural Development, the export of wood and wood products in July 2023 reached nearly 1.1 billion USD; Cumulative export of wood and wood products in the first 7 months of the year reached 7.1 billion USD, 25% lower than the same period last year.
However, the export turnover of July 2023 has risen to over 1 billion USD after a long period of deep decline, showing a signal that the export of wood and wood products has gradually recovered.
Due to the impact of wildfires in Canada, more than 4 million hectares of forests in Alberta, British Columbia and Quebec have been damaged, greatly affecting the supply of timber in North America in the short term. Many wood and stone factories had to close temporarily. The disruption of the industrial wood industry caused wood prices to recover.
DSC said that, in August 2023, the price of lumber (Lumber) reached 514 USD/1,000 ft, significantly recovered from the low point at the beginning of the year only 400 USD/1,000 ft. Although much lower than the peak in the 2021-2022 period, it should be noted that in the 2020-2022 period, prices of many materials skyrocketed due to supply chain disruptions.
DSC considers this phenomenon to be rare, occurring only once every decade, so it is not a good example to compare. The current wood price is higher than the upper limit of the period before 2020. According to DSC, this is a pretty good price for wood businesses to be profitable. DSC expects the US housing market to recover to support the demand of wood exporters.
From the second quarter of 2022, according to the tightening monetary policies of the US government, high interest rates on home loans caused sales of ready-built homes in the US to decline continuously. Families also tend to limit spending and cut spending, especially for non-urgent items such as buying new furniture, kitchen tables…
However, DSC believes that this factor may reverse in the fourth quarter of 2023 because the interest rate level is more stable and the US economy is more stable than expected. In fact, US ready-built home sales have escaped the sharp decline since February 2023.
The recovery signal not only appeared in the ready-built housing area, the new housing market in the US also showed clear signs of recovery. After a decline from April 2022, the number of new homes built in the US has recovered significantly since the beginning of the year.
In May and June 2023, the real estate market in the US started construction of 1.56 million units and 1.43 million units respectively, improving from the bottom area of only 1.3 million units in January. In comparison, the current demand for new housing construction is still higher than the pre-COVID-19 period in 2020.
From there, it can be seen that the US housing market is standing firmer than many investors expected, especially considering that US interest rates are still anchored at high levels.
In fact, the export of wood and processed wood products to the US and Europe has decreased significantly from the beginning of 2023 until now due to a sharp decrease in consumption. The poor purchasing power from inflation and high interest rates directly affected the business activities of timber enterprises.
For Phu Tai Joint Stock Company (stock code: PTB), the revenue of the wood segment in the second quarter of 2023, both domestically and from export, decreased by 65% and 55% over the same period, respectively. PTB’s wood segment gross profit margin in the second quarter of 2023 reached 20.9% (down from 23.1% in the same period in 2022).
However, in the second half of the year, DSC believes that the consumption of wood products is likely to improve when the US economy is starting to stabilize and construction demand increases again.
In the future, DSC expects that the recovery of the US housing market will improve wood demand, and be the growth engine for the wood segment of Phu Tai Joint Stock Company.
In fact, the world market is constantly fluctuating and increasingly unpredictable, which is a big challenge for many industries; including the wood industry, but still create opportunities for businesses with good adaptation strategies.
This is the opinion of experts at the Vietnam Furniture and Wood Industry Forum with the theme: “Keeping your position – taking advantage of opportunities, organized by the Ho Chi Minh City Woodworking and Handicraft Association (HAWA) in Ho Chi Minh City, the afternoon of July 28.
Preliminary survey results conducted by HAWA show that orders from enterprises in the industry have decreased by an average of 30% in the past time. However, in July 2023, businesses in the industry began to receive orders again, serving the year-end furniture shopping season of the world market.
Mr. Pham Phu Ngoc Trai, Chairman of the GIBC Global Integration and Business Consulting Company, said that the current reduction in orders of the wood and furniture industry is only temporary.
Vietnam’s furniture industry has enough room to develop in the next 5 to 10 years. Compared with the forecast of global average GDP growth at 3%, the compound growth rate of the world furniture industry is 4.5%.
According to a forecast from Statista Market Insights, the world furniture market revenue in 2023 may reach 766 billion USD and grow for many more years, it is estimated to reach approximately 932 billion USD in 2027.
Vietnam’s wood processing industry has maintained its growth for many years at 15.4%/year and is in the top 5 largest wood furniture exporting countries in the world, proving that the industry has solid internal resources.
In fact, although Vietnam’s wood industry still has a lot of room for development, it has been and is having to overcome great difficulties.
Attending and speaking at the opening ceremony of Binh Duong International Wood Materials and Machinery Fair – BIFA WOOD VIETNAM 2023 on August 9, Deputy Minister of Agriculture and Rural Development Nguyen Quoc Tri commented that in the 7 months of 2023, due to the complicated and prolonged development of the world’s conflicts, causing high inflation worldwide, leading to the main export markets of Vietnam’s forest products continuing to tighten spending on non-essential products; including timber and forest products.
In fact, the financial picture of wood industry enterprises in the first half of 2023 properly reflects the difficulties of the whole industry with a sharp decline in both revenue and profit.
In the second quarter of 2023, An Cuong Wood Joint Stock Company (stock code: ACG) recorded net revenue of 968 billion , down 9% over the same period. Most of An Cuong Wood’s revenue comes from the domestic market, accounting for 85%. After deducting expenses, An Cuong Wood reported a 32% decrease in profit, to 108 billion VND.
Explaining the reason for the difference in profits, An Cuong said that profits dropped sharply due to complicated developments in the domestic and international economic situation, and consumers were cautious in spending.
In the first 6 months of this year, An Cuong Wood recorded a net revenue of 1,648 billion VND and a net profit of 145 billion VND, down 14% and 48% respectively over the same period.
With Duc Thanh Wood Processing Joint Stock Company (stock code: GDT), its revenue decreased by 31% to 89 billion VND. After deducting expenses, the company reported a profit of 7.9 billion VND, down 67% compared to a profit of 24 billion VND in the same period last year.
Explaining the result of the sharp drop in profit, this business said that its revenue dropped sharply due to the difficult world economy and a sharp decrease in purchasing power. Export orders are few, but fixed management costs do not decrease.
Accumulated in the first 6 months, Duc Thanh Wood recorded net revenue of 152 billion VND, profit after tax of 15 billion VND, down 36% and 65% respectively over the same period.
In the second quarter of 2023, Truong Thanh Wood Industry Group Company (stock code: TTF) recorded revenue of 388 billion VND, down 37% over the same period; After tax, the business lost 27 billion VND.
Accumulated in the first 6 months of 2023, Truong Thanh Wood recorded revenue of 719 billion VND, down 38% over the same period. The company lost 25 billion VND in the first half of 2023, while the same period last year made a profit of 10 billion VND.
