Bloomberg News

Vietnam’s Biggest Sugarmill Sees 42% Profit Jump as Demand Gains

December 14, 2011

Dec. 14 (Bloomberg) -- Societe de Bourbon Tay Ninh Joint- Stock Co., Vietnam’s largest-listed sugar company, forecasts profit will jump 42 percent this year amid rising consumption as the company looks for expansion opportunities.

Net income will likely be 490 billion dong ($23.3 million) this year, General Director Nguyen Ba Chu said yesterday. Profit in 2010 was 345.2 billion dong and output rose by a third to 80,000 metric tons this year from 2010, he said.

“Vietnam has a young population that consumes more and more coffee, soda, candies and cakes,” said Chu, whose firm is based in the southern province of Tay Ninh. “Higher incomes also allow people like farmers to afford sugar.”

Vietnam’s growing demand for sugar is outpacing supply. The country’s 40 producers only meet 70 percent of the demand for sugar, according to an Aug. 23 report by Ha Thanh Securities Joint-Stock Co.

The company is also scouting for domestic sugar producers it can partner with or acquire, Chu said in a phone interview.

“Within the next three years, mergers and acquisitions are necessary for the sugar industry to become more competitive regionally and internationally,” he said.

Many of Vietnam’s sugar companies aren’t competitive regionally, Chu said. Most plants process about 1,500 tons to 2,000 tons per day, while capacity at factories in neighboring countries is at least 10,000 tons daily, he said.

Capacity Boost

Bourbon Tay Ninh boosted its capacity to 9,000 tons per day for the 2011-2012 crop, from 8,000 tons in the previous crop, he said. Its land under cultivation will increase to 15,000 hectares (37,000 acres) in 2012-2013, from 12,000 hectares as the company gives farmers capital and technical assistance.

Production also increased this year because of good weather, Chu said. He expects a drop in output in 2011-2012 because of heavy rain in September and October. The sugar cane will be better quality and yield more sugar, helping to make up for the drop in output, Chu said.

Bourbon Tay Ninh rose 0.9 percent to 11,300 dong in Ho Chi Minh City yesterday. The company has fallen 16 percent this year, compared with a 23 percent decline for the benchmark VN Index.

Vietnam’s consumer goods industry is being fueled by a young population and rising incomes and has attracted foreign companies from KKR & Co. to Burger King Holdings Inc. The nation’s per capita income is forecast to rise to as much as $1,537 next year from an estimated $1,385 this year, according to a government report released on Oct. 20.

Masan Consumer Corp., a unit of Masan Group, the country’s biggest listed company, agreed in April to sell a 10 percent stake to KKR & Co., the investment firm managed by Henry Kravis and George Roberts, for $159 million in Vietnam’s largest private-equity investment.

--Diep Ngoc Pham. Editors: K. Oanh Ha, Andrew Hobbs

To contact Bloomberg News staff for this story: Diep Ngoc Pham in Hanoi at dpham5@bloomberg.net

To contact the editor responsible for this story: K. Oanh Ha at oha3@bloomberg.net


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