As wood export turnover is rebounding with rising demand in the domestic market, the revenues of Vietnamese wood enterprises are expected to advance. However, skyrocketing prices of raw materials and logistics costs will weigh on these companies’ gross profit margin in 2022.

VNDIRECT Securities Corporation (VNDIRECT) estimated that the total revenue of listed Vietnamese wood and wood products companies in the first quarter (Q1) of 2022 rose by 10.2% year-on-year thanks to the recovery of wood producers in the south.

After the social distancing order was lifted, most wood companies in the southern region resumed operations at 90% capacity in the first quarter of 2022, while in the second half of 2021 it was only 60-65%.

Nevertheless, there is a common factor among wood industry businesses, that is whether their revenue increases or decreases, the gross profit margin of most companies declined in 2022 due to higher input materials and logistics costs.

Of which, the gross profit margin of the wood segment of Phu Tai dropped 1.4 percentage points compared to the same period in 2021, to 21.3%, because the prices of imported sawn pine and round pine rose 52% and 38% respectively. The increase in wood prices is due to the impact of the Russia-Ukraine conflict and high logistics costs.

The gross profit margin of GEWOODCO also slid 6.2 percentage points during the same period, due to a 20% gain in input wood prices since January 15.

Market research and consulting firm Grand View Research forecast that the US wooden furniture market value would grow by around 7.9% in the five years from 2022 to 2027, driven by significant growth in single-family houses, while home loans in the US are at the highest level since 2018, with home loan contracts up 8% over last year in April.

Analysts expected that high demand for housing in the US would boost the purchase of wooden furniture products in 2022-2023. The timber industry is also said to benefit from China's reduction in production capacity.