Hanoi (VNS/VNA) - Several construction firms have reported a drop in profitsin the first quarter of this year due to the COVID-19 pandemic and risingmaterial prices.

Sincethe beginning of this year, the prices of construction materials on the markethave increased sharply amid worries over shortages of materials and risingdemand for economic recovery after COVID-19.

Localbrands have increased steel prices by 30-40 percent compared to the fourthquarter of 2020, putting great pressure on the construction industry, assteel currently accounts for 20 percent of inputs for construction work.

Notonly steel, the price of cement has also skyrocketed. Since mid-April, manycement manufacturers have adjusted the price of products sold with an increaseof 40,000 VND per tonne.

Theprices of some other key materials such as sand and gravel are alsoincreasing dramatically.

Facingthe double pressure from the COVID-19 pandemic and rises in material prices, aseries of contractors have decided to suspend construction progress to wait formarket stabilisation.

CotecconsConstruction Corporation (CTD)’s revenue fell from 3.5 trillion VND (151.5million USD) in Q1 last year to 2.56 trillion VND in Q1 this year, down bynearly 28 percent.

Grossprofit was 120 billion VND, down by more than 38 percent compared to 2020. Thegross profit margin was 4.67 percent, significantly lower than 5.46 percent ofthe same period last year.

Itspre-tax profit dropped 55 percent to touch 69 billion VND. On the stock market,CTD prices have dropped and are currently being traded at 58,600 VND pershare, down more than 27 percent since the beginning of the year.

Thepre-tax profit of Hoa Binh Construction and Real Estate Corporation (HBC) in Q1decreased by 12 billion VND, down 37 percent. In contrast, the gross profitmargin improved from 7.7 percent in Q1, 2020 to 8.7 percent in Q1 this year.

Thisyear, in addition to civil real estate construction, HBC has stepped upcontracting for energy, industrial and infrastructure projects to increasemarket share.

RiconsConstruction Investment JSC reported its Q1 profit decreased 28 percent toVNĐ31 billion.

HungThinh Incons Joint Stock Company (HTN) saw revenue in Q1 increased to 1.16trillion VND but gross profit fell sharply to 103 billion VND.

Ina new report, the Vietnam Steel Association (VSA) indicated that steel pricesmay continue to rise until the end of the third quarter.

Onits side, the Vietnam Association of Construction Contractors (VACC) has issueda petition to the Government to soon direct ministries and branches toexamine the cause of the sudden increase in steel prices./.