The Cement Business Blues: A Turnaround Tale?

From Losses to Profits: A Turnaround Story for Vietnam’s Cement Industry

In a remarkable turnaround, Vicem Ha Tien Cement Company reported a 145% surge in after-tax profit, amounting to over VND 112 billion in the second quarter, ending a streak of 11 lackluster quarters.

This achievement is attributed to an 8.5% increase in cement consumption compared to the previous year. Additionally, during the second quarter, the company successfully reduced production costs and benefited from lower prices for raw materials and fuel.

Bim Son Cement Company also reported its highest profit in 13 quarters, earning over VND 64 billion due to significantly reduced production costs. For the first six months, Bim Son Cement’s net profit surpassed VND 5 billion, reaching 6% of the annual plan.

The standout performer for the first half of the year was Hoang Mai Cement Company, with a net profit of over VND 7 billion, a 27-fold increase compared to the previous year, and the highest since Q3 2022. This remarkable improvement is a result of their innovative approach of substituting part of the coal with wood chips, bark, and solid waste, leading to a VND 130,000 increase in clinker prices per ton. The company has turned around its fortunes, earning nearly VND 8 billion in profits, compared to a loss of VND 40 billion in the same period last year, and is on track to achieve more than half of its annual plan.

These impressive results have contributed to the recovery of the Vietnam Cement Corporation. For the first six months of the year, the Corporation achieved a total revenue of VND 13,612 billion, equivalent to 47% of the annual plan, and a 3.9% increase compared to the same period in 2024. Additionally, the Corporation’s pre-tax profit (excluding exchange rate differences) reached VND 1.3 billion, a significant improvement from the loss of VND 811 billion in the previous year. During this period, the Corporation also contributed VND 415 billion to the state budget.

Opportunities and Risks: Navigating a Dynamic Landscape

With a boost from public investment and favorable macroeconomic and legal factors, construction and building materials companies are poised to thrive, particularly in product consumption, including cement.

Vietnam’s cement industry demonstrated robust growth in the first half of the year, with total production reaching nearly 61 million tons, a 62% increase year-on-year. Cement consumption also rose by 27%, totaling more than 54 million tons. Domestic consumption was a key driver, accounting for 37.6 million tons, a 39% increase attributed to accelerated public investment in infrastructure projects, notably in transportation, irrigation, and social housing.

The Ministry of Construction forecasts cement consumption to increase by 2-3% this year, reaching 95-100 million tons. Domestic consumption is expected to account for 60-65 million tons, while exports are projected at 30-35 million tons.

Vietnam Cement Corporation anticipates that cement consumption in the domestic market will continue to rise in the third quarter and the remaining months of 2025 due to increased public investment in infrastructure and transportation by the government. Additionally, the real estate supply is expected to recover as legal measures begin to impact the market.

However, the early arrival of the rainy season in the North and Central regions may hinder construction activities, leading to regional fluctuations in cement demand. The industry also faces ongoing challenges, including supply-demand imbalances, intense price competition, and a shift in consumer preferences from bagged to bulk cement and from premium to lower-priced products, impacting production and business efficiency.

According to SSI Research, the industry faces a persistent challenge as production capacity consistently exceeds demand, particularly in the North. Demand growth remains reliant on key infrastructure projects such as the Long Thanh Airport, the North-South Expressway, and the Ho Chi Minh City Ring Road 4.

Analysts predict a 6% increase in total cement consumption this year, driven by public and private construction sectors. However, average selling prices are likely to remain under pressure due to prolonged oversupply.