Record-Breaking Profits for Rubber Group Since 2012

GVR’s Q4 2024 financial results demonstrated a strong performance with revenue, profit, and gross profit margin all reaching high levels not seen in years. Revenue stood at 9,300 billion VND, a 23% increase year-on-year, primarily driven by the core business of natural rubber. There were also improvements in revenue from rubber products, wood processing, infrastructure, and real estate. Notably, gross profit nearly doubled to over 3,000 billion VND, resulting in a gross profit margin of 33%, up from 21% in the previous year.

In addition to the rise in natural rubber prices, this performance was supported by reduced borrowing costs and sales expenses, as well as higher profits from joint ventures and associates. As a result, net profit for the quarter reached nearly 2,000 billion VND, a 69% increase.

The Vietnamese rubber industry giant concluded its most successful year since 2012 – when natural rubber prices were at their peak – with revenue and profit of over 26,200 billion VND and 4,200 billion VND, respectively, representing a 19% and 61% increase year-on-year.

However, GVR’s success remains largely dependent on its primary business of rubber cultivation and extraction. At the 2024 year-end conference, Mr. Do Huu Huy, Vice Chairman of the Commission for the Management of State Capital at Enterprises, acknowledged that while other sectors like industrial parks and hydropower have shown some efficiency, they continue to face legal, climate change, and competitive challenges. Additionally, operations in rubber wood and rubber industry faced significant difficulties and were not effective.

As of the end of 2024, the Group continued to hold a substantial amount of assets in banks, with approximately 20,000 billion VND in term deposits and cash equivalents; notable when compared to the total short-term assets of over 27,700 billion VND. This strategy provided the company with stable interest income, generating over 1,000 billion VND in the past year.

Apart from financial success, GVR made significant progress in its sustainable development strategy. The Group has obtained national and international sustainable forest management certificates for over 215,000 hectares of forest and implemented solutions to comply with the EU’s Anti-Deforestation Regulations (EUDR). Currently, 34 member companies of GVR have developed sustainable forest management plans for a total area of approximately 287,000 hectares, of which 18 companies have achieved VFCS/PEFC-FM certification.

Regarding EUDR, a report by Phu Hung Securities (PHS) suggests that these policies are likely to disrupt and alter a portion of the natural rubber supply entering Europe, benefiting Vietnamese enterprises, especially those well-prepared with sustainability certifications.

“These regulations will increase the demand for certified sources from producing units serving the European market, especially from the manufacturing powerhouse of China. This presents an opportunity for certified Vietnamese suppliers as China currently accounts for 75%-80% of Vietnam’s rubber export value,” PHS analyzed in a November 2024 report.

Furthermore, as we step into 2025, the natural rubber industry is expected to remain volatile due to supply shortages. Speaking at the Rubber Industry Workshop earlier this month, Ms. Arusha Das, Head of Pricing, Data, and Research at Helixtap – a global commodities data and information platform – attributed this to the impact of climate change and geopolitical factors.

In Southeast Asia, the world’s largest rubber-producing region, unusual weather patterns have caused an early leaf-fall season, significantly reducing output. Simultaneously, Ivory Coast, a major rubber exporter in Africa, has imposed a ban on the export of cup lump (raw rubber material), further limiting global supply.

Mr. Le Thanh Hung, Chairman of the Vietnam Rubber Association (VRA) and General Director of GVR, shared a similar sentiment, anticipating a challenging 2025 due to climate change, emission reduction pressures, and stringent requirements from EUDR. In the short term, rubber exporters are likely to increase sales before the regulations come into effect later this year.

Despite the challenges, the industry’s total export turnover is expected to reach 12.1 billion USD in 2025, representing a 10% growth compared to 2024.

Tu Kinh

– 18:18 31/01/2025