October 31, 2018

Weak swine prices weighed down on Masan Nutri-Science's profits

Masan Group posted net revenues of VNĐ26.63 trillion in January-September 2018, down 3% year-on-year, dragged down by the pig price crisis on Masan Nutri-Science's (MNS) topline. Excluding MNS, consolidated net revenues would have grown by 29% in the first nine months, reported Viet Nam News.

Of the group's subsidiaries, Masan Consumer Holdings continued to be biggest growth contributor during the first half of 2018, particularly for core consumption products and new growth drivers in seasonings, beverages, processed meat and beer.

For MNS, lower swine prices in the first five months of 2018 coupled with a longer-than-expected delay pickup in commercial feed demand resulted in a net revenue of VNĐ10.035 trillion in the first nine months, down 31.2% year-on-year.

However, swine prices have been maintained at about VNĐ50,000 per kilogramme since there is an ongoing structural supply deficit in Vietnam. With African swine fever issues in China coupled with a spike in year-end demand due to the 2019 Tết holiday, prices are expected to stay strong in the near term.

Subject to a recovery in the swine feed market, MNS's net revenue is expected to be down 20-30% this year. However, the management expects a stronger recovery in 2019 if swine prices continue to hold up at around current levels.

According to Masan's chairman and CEO Nguyễn Đăng Quang, Masan Nutri-Science is "still feeling pain from the pig price crisis".

"The feed market has since been recovering, but our strategic bet is on meat not feed," stresses Nguyễn.

"We have started selling pig livestock with great results, but this will cease in 2019 as we begin to fully process our pig supply into branded meat products for consumers. We look forward to closing the year on a strong note and crystallising our foundation to deliver double digit top and bottom line growth for 2019 and beyond."