The Struggling Cement Business: 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 unprofitable quarters.

This impressive performance 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 achieved its highest profit in 13 quarters, earning over VND 64 billion due to significantly lowered production costs. For the first six months, Bim Son Cement recorded a net profit of more than VND 5 billion, reaching 6% of its 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, an astonishing 27 times higher than the previous year’s figure. This remarkable achievement can be attributed to their innovative approach of substituting part of the coal with wood chips, bark, and solid waste, resulting in a VND 130,000 increase in clinker prices per ton. The company has turned a significant corner, earning nearly VND 8 billion in profits, compared to a loss of VND 40 billion in the same period last year, and is well on its way to achieving its annual plan.

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

Navigating Opportunities and Risks: A Balancing Act for the Industry

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

The total cement production in Vietnam for the first six months reached nearly 61 million tons, a substantial increase of 62% compared to the previous year. Cement consumption also rose by 27%, totaling more than 54 million tons. Domestic consumption was a key driver, with 37.6 million tons, representing a 39% increase, largely attributed to accelerated public investment in infrastructure projects, notably in transportation, irrigation, and social housing.

The Ministry of Construction forecasts a 2-3% increase in cement consumption for the year, estimating a total demand of 95-100 million tons. Of this, domestic consumption is projected to account for 60-65 million tons, while exports are expected to reach 30-35 million tons.

Vietnam Cement Corporation anticipates that the third quarter and the remaining months of 2025 will witness a further increase in domestic cement consumption, driven by the government’s push for public investment, especially in transportation infrastructure and construction. Additionally, the real estate market is expected to rebound as legal measures take effect.

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 efficiency.

According to SSI Research, the industry continues to grapple with excess production capacity, particularly in the North. Demand growth remains reliant on key infrastructure projects such as the Long Thanh Airport, the North-South Expressway, and Ho Chi Minh City’s Ring Road 4.

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