Luks Group (Vietnam Holdings) reports 4% YoY drop in revenue

Luks Group (Vietnam Holdings) Company Ltd has announced revenue of HKD266.3m (US$33.9m) in the first half of 2022, down 4.1 per cent from HKD277.7m in the same period a year earlier. Profit over the same period declined from HKD42.1m to HKD23.5m, while earnings per share contracted from HK8.5c to HK5.1c. 

Over the six months, the cement and clinker sales of the group’s cement plant was approximately 420,000t, down 19.8 per cent on the 524,000t sold in the 1H21. From its cement business, the group generated revenue of HKD164.5m in the 1H22, compared to HKD175.6m in the year-ago period, marking a contraction of 6.3 per cent YoY. The cement business recorded a loss after tax of HKD6.5m in the first six months of the year, compared to a profit after tax of HKD8.8m in the 1H21. 

According to the company, the first half of 2022 saw a sharp rise in production costs and oversupply of the local cement market, seriously eroding marginal profits. Coal prices have not only doubled. but there has been a shortage of coal in the market due to the Vietnamese government stipulating that coal must be prioritised for thermal power generation. Shipping difficulties and a sharp increase in freight rates have also affected the price and supply of imported coal. Raw materials, such as gypsum, have risen in price during the six-month period by more than 50 per cent. 

Government funding for public infrastructure works has also slowed following the resurgence of the COVID-19 pandemic in the 2H21, stagnating the economy. In the 1H22, the disbursement of the government funding in public works accounted for just 28 per cent of the state’s budget plan, resulting in a fall in local cement demand over the period. Exports also fell significantly as demand dropped for shipments to China, Philippines and Bangladesh, increasing the local cement supply and intensifying market competition.