The annual General Meeting of Shareholders of SSC in 2024 was held in the morning of April 22, 2024. Photo: Thuong Ngoc
|
Soaring input costs have eroded the profits of the agricultural sector
Sharing about the agricultural sector situation in 2023, Chairwoman of SSC Tran Kim Lien stated that no year has the export price of Vietnamese rice been as good as in 2023. However, while the rice price was very high, having increased by 40% at some point, the production and business efficiency of agricultural production enterprises was very poor because the increase in input costs for farmers was greater than that in output.
At SSC in the past year, input costs increased by 40%, but output did not increase because of its commitment to the international market regarding food security. Similarly, for the domestic market, output only increased by 5-10% while input costs increased by 40%, thereby eroding all profits.
In the past year, SSC has invested 15 billion VND to modernize infrastructure, industrialize the seed sector, and enhance competitive capacity. In addition, the company has restructured its organizational model as well as its product strategy for SSC to regain its position as the “leading company” in the seed industry.
Conservative profit target
In 2024, SSC sets a target of net revenue of over 395 billion VND, an increase of 30% compared to the previous year. However, after-tax profit is forecasted to reach only 57 billion VND, a modest increase of 5%.
Regarding the plan to set the business plan for 2024 with modest growth, Chairwoman of SSC said that currently, from the North to the South, even all of Southeast Asia has never faced such hot weather as this year, from December until now, even the Mekong Delta has not had any rain. Coastal provinces such as Soc Trang, An Giang, Tien Giang, and Long An have been affected by saltwater intrusion up to level 3 and have almost no rice seedlings. Export markets such as Cambodia and Laos are also seeing bare hills and no rice seedlings due to the drought. These factors have had a major impact on the business results of SSC.
Moreover, geopolitical conflicts continue to escalate and show signs of becoming increasingly serious, leading to further increases in logistics costs as the price of gasoline increases. The export price of food is high but is showing signs of cooling down. All input costs continue to increase, and even interest rates are showing signs of increasing. These factors will negatively affect Vietnamese agriculture in 2024.
The business target approved by the congress is entirely dependent on production and business activities, not taking into account financial targets, specifically the investment in Vietnam Rice Joint Stock Company (VINARICE). If VINARICE pays a dividend of 10%, SSC can receive more than 70 billion VND.
Regarding the strategy of SSC in the coming time, Ms. Lien said that the profit margin of the seed industry is very high, from 30% and up, and can reach 39% if products have intellectual property protection. Therefore, the growth model of the company in the coming time is that 90% of products are exclusive products. To achieve this, SSC will use science and technology as a foundation to develop its own exclusive products, and limit the introduction of popular products to the market. In addition, the company will also apply digital marketing and transform its sales method from B2B to B2C.
It is worth noting that the basic investment level in 2024 at the congress has been adjusted compared to the previously published document, specifically reduced from 7.3 billion VND to 3 billion VND.
Sharing about this, Ms. Lien said that initially the company planned to renovate the entire cold storage and make new investments in Cu Chi, but after reconsideration, it was not necessary to invest on such a large scale, especially the processing machine system. SSC has calculated the investment level to closely match the investment segment in order to use investors’ money most effectively.
Regarding profit distribution, SSC has decided to pay a cash dividend of 30% for 2023. It is expected that this rate will be maintained for the 2024 profit.
In addition, the congress approved the dismissal of Mr. Nguyen Dinh Nam from the position of member of the Board of Directors and elected Mr. Dang Van Vinh to replace him.
Member of the Board of Directors and General Director of SSC Dang Van Vinh (left) and Chairwoman of the Board of Directors Tran Kim Lien. Photo: Thuong Ngoc
|
It is known that Mr. Vinh is currently the General Director of SSC, having just been appointed on February 19, 2024. Mr. Vinh graduated with a Bachelor of Agricultural Science from Ho Chi Minh City University of Agriculture and Forestry and a Bachelor of English Literature from Ho Chi Minh City University of Social Sciences and Humanities. He then went on to earn an MBA from Lincoln University, Oakland, California.
Before joining SSC, he worked at Bioseed Vietnam Co., Ltd., and Syngenta Vietnam Co., Ltd. as Production Director.
