PetroVietnam Fertilizer and Chemicals Corporation, trading under the ticker DPM on the Ho Chi Minh Stock Exchange, is a leading Vietnamese company specialising in the production and distribution of fertilisers and chemicals. It is a subsidiary of PetroVietnam, a state-owned oil and gas conglomerate.
In the first half of 2024, DPM’s revenue and net profit increased by 4.7 percent and 15.4 percent year-over-year respectively. This growth was mainly fueled by increased urea output and higher urea prices compared to 2023.
However, this increase has not covered previous declines–In 2023, revenue and net profit decreased by 26 percent and 90 percent respectively compared to 2022. This was due to increased competitive pressure from imported fertilisers and increased costs of raw materials for urea production.
It’s notable that domestic urea production capacity currently exceeds actual demand. While the annual domestic demand for urea is estimated to be between 1.6 and 1.8 million tons, domestic urea production capacity is approximately 3 million tons. To tackle this issue, large fertiliser companies like DPM are concentrating on growing their market share in NPK, a type of fertiliser that includes nitrogen, phosphorus, and potassium. This sector in Vietnam is currently divided among many small businesses and households.
Urea and NPK accounted for 76 percent and 13.3 percent of DPM’s total output in the first half of 2024, respectively.
Notably, fertilisers when sold to consumers in Vietnam are exempt from VAT; however, producers still incur a 10 percent VAT on input materials. Domestic fertiliser producers, therefore, cannot access VAT refunds, while imported fertilisers are exempt from VAT altogether, making domestic products less competitive. The government is currently considering introducing a 5 percent VAT on fertilisers, to provide some financial support for domestic fertiliser producers.
Disclosure: The author does not have any financial interest in DPM stock.See also: How to Open a Trading Account in Vietnam: Technical Guide 2024