Giant steelmaker Formosa Ha Tinh suffers $620 mln loss in 2023

Taiwan-invested Formosa Ha Tinh Steel, based in the central Vietnam province of Ha Tinh, recorded a loss of TWD20.1 billion ($620 million) in 2023.

The annual report of parent firm Formosa Plastics Group says that continued sluggishness of China’s real estate market and low demand for steel products in 2023 resulted in a large volume of low-price dumping in Southeast Asia.

Consequently, to maintain market share and avoid losing customers, Formosa Ha Tinh Steel had to reduce its prices, even if there wasn’t a significant decrease in raw material costs.

As a result, the company was unable to perform ideally, with 2023 revenue declining 3.2% from 2022 to approximately TWD124.5 billion ($3.84 billion).

However, Formosa Plastics Group also mentions a positive development regarding its steelmaker subsidiary in Vietnam.

In 2023, “Formosa Ha Tinh Steel's efforts to develop an export market gradually come to fruition with successful entry into the European and the U.S. markets,” the report says.

Overall, Formosa companies in Vietnam recorded a combined turnover of TWD141.5 billion ($4.37 billion), down 10.5% year-on-year, and a loss of TWD2.2 billion in the year.

Another factor in the underperformance was the toughest of conditions encountered by the textile industry in nearly four decades. Amidst high inflation, shrinking demand and pricing competition posed by textile products from China, cutting production was the only choice, leading to a drop in sales of textiles, nylon, and rayon cotton, the Formosa Plastic Group report says.

The group entered Vietnam in 2001 with a 300-hectare factory in the southern province of Dong Nai to produce fiber, thermal power, plastics, and dyes. So far, it has increased its investments in the province to $1.64 billion.

In 2008, the Taiwanese group expanded its business in Vietnam by investing in a 3,300-hectare steel complex in the central province of Ha Tinh, including a steel mill, a thermal power plant and a deep-water seaport.

At the end of 2012, the company increased its investment in this project from $7.9 billion to $9.9 billion. The firm has actually made a proposal to raise the investment to $28.5 billion.

Formosa Ha Tinh Steel attracted widespread criticism in Vietnam for an environmental disaster in 2016 that saw mass deaths of marine life along the coasts of the central provinces of Ha Tinh, Quang Binh, Quang Tri and Thua Thien-Hue.

An estimated 70 tons of dead fish washed ashore along more than 200 km (125 miles) of Vietnam’s central coastline, hurting the livelihoods of millions dependent on the fisheries and tourism industries. It was slapped with a $500 million penalty which was fully paid in 2022.