Vietnam's largest rubber firm expects profit to go sideways

Its overheads, including wages, fertilizer, logistics and electricity, have been surging, board member Pham Van Thanh said.

Rubber, accounting for half of GVR’s profits, were most affected by price surges, he added.

Low rubber prices despite recent input hikes, fierce competition affecting rubberwood sales and legal issues relating to land use would also drag profits down, the group’s management said in a document submitted at its annual shareholders meeting Friday.

The group expected huge profits from converting rubber farms into industrial zones, but this has run into legal hassles, Thanh said.

"If (the legal) problems can be solved, our profits will likely surpass plans."

The group also plans to sell stocks in two subsidiaries, VRG of Vietnam Rubber Industrial Zone and Urban Development and SIP of Saigon VRG Investment, but is yet to do so in the current bearish market.

Stock sales usually account for 15 percent of profits, Thanh said.

GVR's pre-tax profits in the first quarter rose 15 percent year on year to VND1.5 trillion ($64.6 million).

Last year, it posted VND28.35 trillion in revenue, and VND5.34 trillion in profit; and reduced dividend from 6 to 4.1 percent to reinvest in an industrial zone in the southern province of Tay Ninh.