BTS is consistently losing
The Vietnam cement market is in surplus supply, while consumer demand is poor, causing Vicem But Son Cement JSC (HNX: BTS) to lose VND 36.5 billion in 2Q24, bringing the total cumulative loss to VND 182 billion after seven consecutive quarters of losses.

>> Cement companies continue to incur losses on excess supply
According to the newly published financial statement for the second quarter of 2024, BTS generated net revenue similar to the same time in 2023, totaling over VND 692 billion. BTS's gross profit in 2Q24, excluding the cost of goods sold, was more than VND 8 billion, a 79% decrease from the same time the previous year.
During this period, revenue from BTS's financial activities is not recorded. Interest expenses declined by 25% to more than VND 17 billion, while company management costs fell by 16% to VND 22.6 billion over the same time. At the same time, other earnings climbed by 43% during the same period, reaching about VND 15 billion, but could not help BTS avoid a loss after taxes of VND 36.5 billion. This is also the fifth straight quarterly loss for the corporation.
In the first half of 2024, BTS achieved net sales of over VND 1,207 billion, a 10% decline from the same time the previous year. The post-tax profit was -92 billion VND. This bleak financial outcome was not unexpected by BTS, which set a net loss of around VND 111 billion for 2024, up from more than VND 96 billion in 2023.
BTS's total assets stood at VND 3,407 billion at the conclusion of the second quarter of 2024, a 3% decrease from early 2024. The most significant variance was a 25% and 66% decrease in inventory and construction expenditures compared to the same time, to VND 491 billion and more than VND 164 billion, respectively.
Short-term receivables have also climbed by 2.4 times as much as at the start of this year, reaching more than VND 250 billion, owing to receivables of VND 27 billion from Thanh Lam Commerce JSC, more than VND 15 billion from Viet Duc Lts, and VND 14 billion from Duc Thao Ltd...
Meanwhile, BTS' liabilities at the end of the second quarter were over VND 2,231 billion, the same as at the start of the year. Nearly half of them are financial liabilities, totaling VND 1,107 billion, including VND 919 billion in short-term loans and more than VND 188 billion in long-term loans.
Although the cement industry is expected to be less tough than in 2023, in the first half of 2024, national investment in infrastructure, housing, and so on remains low, while cement production greatly exceeds demand. This directly affects the absorption of domestic building materials, such as cement.
According to Guotai Junan Vietnam, the gloomy outlook for an excess supply of cement will remain. Clinker and cement sales declined 6.5% in 2023 owing to low demand in both local and international markets, totaling 86.0 million tons.
Cement and clinker production capacity are expected to reach 147.4 million metric tons and 110.7 million metric tons, respectively, by 2026, as the number of cement manufacturing facilities increases (two additional plants are in operation). Guotai Junan Vietnam anticipates cement consumption to increase if governmental investment programs are implemented, as well as the real estate sector to recover.
In the medium term, this securities company contends that demand for cement consumption remains low relative to supply due to the delayed building of the house real estate market.
>> Cement association proposes PM address challenges facing producers
Another reason for the surplus supply of cement is that China has banned importing cement from Vietnam since May 2022. As a result, Vietnam's cement surplus has worsened, with consumption expected to fall below 70% by 2029.
The Vietnam Cement Association estimates that overall cement output in the first six months of the year would be 44 million tons, which is comparable to the same time. Now, the factories only operate at 70-75% of their complete design capacity, storing up to 5 million tons.
The cement consumer market is bleak, and the Vietnam cement industry's overall design capacity is excessive (123 million tons, with the potential to manufacture tens of millions more tons). As a result, there are now four lines capable of producing 11.4 million tons of cement per year that have been invested in but have yet to be operational due to insufficient demand.
To alleviate the difficulties of cement production, the Vietnam Cement Association has requested that the Prime Minister and ministries increase domestic cement consumption by encouraging the use of cement for expressways and bridges in areas with weak terrain, such as the Cenu Long River Delta, some areas in the central and mountainous regions, and by strengthening roads with cement instead of ground and sand.
This association further demands that the government submit the elimination of export tariffs on clinker and cement to the National Assembly as soon as possible. Before it is abolished, the clinker export duty of 5% may be maintained. Simultaneously, the government instructs commercial banks to extend financing, lower interest rates for cement industries, and prioritize cement enterprises in accessing bank loans.