Construction companies report lower profits due to COVID-19
Several construction firms have reported a drop in profits in the first quarter of this year due to the COVID-19 pandemic and rising material prices.
Since the beginning of this year, the prices of construction materials on the market have increased sharply amid worries over shortages of materials and rising demand for economic recovery after COVID-19.
Local brands have increased steel prices by 30-40% compared to the fourth quarter of 2020, putting great pressure on the construction industry, as steel currently accounts for 20% of inputs for construction work.
Not only steel, the price of cement has also skyrocketed. Since mid-April, many cement manufacturers have adjusted the price of products sold with an increase of VND40,000 per tonne.
The prices of some other key materials such as sand and gravel are also increasing dramatically.
Facing the double pressure from the COVID-19 pandemic and rises in material prices, a series of contractors have decided to suspend construction progress to wait for market stabilisation.
Coteccons Construction Corporation (CTD)’s revenue fell from VND3.5 trillion (US$151.5 million) in Q1 last year to VND2.56 trillion in Q1 this year, down by nearly 28%.
Gross profit was VND120 billion, down by more than 38% compared to 2020. The gross profit margin was 4.67%, significantly lower than 5.46% of the same period last year.
Its pre-tax profit dropped 55% to touch VND69 billion. On the stock market, CTD prices have dropped and are currently being traded at VND58,600 per share, down more than 27% since the beginning of the year.
The pre-tax profit of Hoa Binh Construction and Real Estate Corporation (HBC) in Q1 decreased by VND12 billion, down 37%. In contrast, the gross profit margin improved from 7.7% in Q1, 2020 to 8.7% in Q1 this year.
This year, in addition to civil real estate construction, HBC has stepped up contracting for energy, industrial and infrastructure projects to increase market share.
Ricons Construction Investment JSC reported its Q1 profit decreased 28 percent to VND31 billion.
Hung Thinh Incons Joint Stock Company (HTN) saw revenue in Q1 increased to VND1.16 trillion but gross profit fell sharply to VND103 billion.
In a new report, the Vietnam Steel Association (VSA) indicated that steel prices may continue to rise until the end of the third quarter.
On its side, the Vietnam Association of Construction Contractors (VACC) has issued a petition to the Government to soon direct ministries and branches to examine the cause of the sudden increase in steel prices.