Challenges mount for Nam Kim Steel JSC

Nam Kim Steel, a major steelmaker in Vietnam, is facing headwinds from weaker exports, while stronger domestic sales have yet to fully offset the decline.

At the same time, the upcoming commissioning of the Nam Kim Phu My plant, located in the former Ba Ria-Vung Tau province, now part of Ho Chi Minh City, is set to add pressure as market demand remains subdued.

Returning to losses after three years

Nam Kim Steel JSC (NKG) reported a return to quarterly losses for the first time in three years in Q4/2025, according to its financial statements.

Net revenue for the quarter fell 30% year-on-year to nearly VND3.15 trillion ($121.2 million). Gross margin narrowed sharply to 2.2% from 6.7%, with gross profit plunging 76% to VND72 billion ($2.77 million).

Financial expenses dropped to VND45.5 billion ($1.75 million) from VND168 billion, while selling expenses fell 60% to VND76 billion ($2.93 million). Despite these cost reductions, the company posted a net operating loss of VND27.3 billion and a loss after tax of VND9 billion ($346,690) for the quarter.

The company said weaker market demand led to lower revenue, while cost of goods sold declined at a slower pace, resulting in a steeper contraction in gross profit.

For full-year 2025, Nam Kim recorded revenue of VND14.81 trillion ($570.5 million) and net profit of just over VND197 billion ($7.59 million), down 28% and 56%, respectively, from 2024.

The U.S. decision to impose preliminary anti-dumping duties had a significant impact on Nam Kim during the year, as the market accounted for a large share of its exports. The company previously said the U.S. anti-dumping investigation launched in September 2024 curtailed export volumes, prompting it to halt shipments to the United States.

As a result, Nam Kim’s export revenue fell 55% to VND6.07 trillion ($233.9 million) from VND13.41 trillion. The company stepped up sales to Australia and Southeast Asia to rebalance exposure to the U.S. and Europe. Domestic revenue rose 20.5% to nearly VND8.83 trillion ($340 million) but was insufficient to offset the sharp drop in exports.

Meanwhile, prices of hot-rolled coil (HRC), the company’s key input, rose last year, particularly after Vietnam’s Ministry of Industry and Trade imposed anti-dumping duties on HRC imports from China. This pushed Nam Kim’s gross margin down to 5.3% in 2025 from 8.9% a year earlier, with the margin sliding further to 2.2% in Q4.

Interest burden looms as $239 million plant comes online

On the Ho Chi Minh Stock Exchange, Nam Kim (NKG) shares have been on a downward trend since early September 2025, falling 25.5% to VND15,300 on Thursday from VND20,000 apiece.

More recently, Ho Minh Phat, son of chairman Ho Minh Quang, registered to buy 5 million shares between February 2 and March 2.

Nam Kim is investing in the Nam Kim Phu My coated steel project with total capital of VND6.2 trillion ($238.8 million) and designed capacity of 800,000 tons per year. The plant is expected to begin operations in Q1/2026. The company targets utilization of 50-60% after two to three quarters and full capacity by 2027.

As of end-2025, construction-in-progress stood at VND4.44 trillion ($171.1 million), up VND4.15 trillion from the start of the year. As a result, interest expenses and depreciation are expected to weigh heavily on Nam Kim’s earnings in 2026.

Total outstanding borrowings at year-end reached VND6.87 trillion ($264.5 million), including VND4.6 trillion in short-term loans and VND2.27 trillion in long-term debt.

Dragon Capital Securities (VDSC) forecasts Nam Kim’s gross margin could improve slightly, supported by inventories of low-cost HRC accumulated in 2025 and the potential reversal of inventory provisions should HRC prices recover.