Major steel producers report mixed Q1 profit results

Steel producer Hoa Sen Group reported a profit increase of 7% year-on-year from January-March, while Nam Kim made a loss for the third consecutive quarter and Hoa Phat Group posted a 21-fold profit decrease.

Hoa Sen Group, Vietnam's leading steel sheet producer, posted consolidated net revenue of VND6.98 trillion ($297.5 million), down 45% year-on-year, and after-tax profit of nearly VND251 billion ($10.7 million), up 7%, in the period, which is the second quarter of its fiscal year 2022-2023.

An important factor driving the group's positive business results was the effective management of expenses. Financial expenses through the quarter reached VND75 billion ($3.2 million), down 42% year-on-year.

The group plans to focus on enhancing operational efficiency at 10 factories and its distribution network of more than 500 branches, stores, and warehouses nationwide.

As of March 31, 2023, the group's total assets stood at over VND17 trillion ($724.48 million), of which liabilities reached VND6.59 trillion ($281 million), up 9% compared to the beginning of October 2022.

On the Ho Chi Minh Stock Exchange, the HSG share price hit VND15,500 ($0.66) at Friday's close.

In contrast, Nam Kim Steel made a loss of VND49 billion ($2.09 million) in the first quarter of this year for the third consecutive quarter.

The company, listed on the HoSE as NKG, earned a net revenue of VND4.38 trillion ($186.44 million), down 39% year-on-year.

As of March 31, 2023, NKG's total assets stood at VND12.75 trillion ($543.42 million), and inventory was valued at VND6.49 trillion ($276.06 million). Liabilities reached VND7.46 trillion ($317.99 million), down VND647 billion ($27.57 million) compared to the beginning of the year.

At its recent annual general meeting of shareholders, NKG's management said that this year, price fluctuations for input materials and fuel remain unpredictable, while high inflation has caused demand for construction materials to decline. The global economy is facing a crisis with surging interest rates and fewer projects being implemented. Meanwhile, the level of competition is increasing, especially in galvanized steel products and steel pipes.

NKG leaders believe that this year's market will not be favorable for growth, but the most difficult time has passed.

On the HoSE, the price of NKG shares stayed at VND14,550 ($0.62) last Friday.

Meanwhile, Vietnam's largest steel producer Hoa Phat Group returned to a post-tax profit of VND383 billion ($16.32 million) in the first quarter of this year, following severe losses in Q3 and Q4 of 2022. But the figure was a 21-fold decrease year-on-year.

Hoa Phat, listed on the HoSE as HPG, said steel and steel products were the main cash earners in Q1, accounting for 94% of post-tax profit. The profit is equivalent to 5% of the company's target for 2023.

The group made losses of VND1.79 trillion ($76.08 million) and VND2 trillion ($85.16 million) in Q3 and Q4 of 2022, respectively.

HPG posted a revenue of VND26.87 trillion ($1.14 billion) in Q1/2023, down 39% year-on-year due to ongoing limited demand.

HPG has forecast prolonged hardships in Q2/2023. It plans to focus on investing in the Hoa Phat Dung Quat 2 Steel Integrated Complex project in the central province of Quang Ngai, and restart production in Quang Ngai and the northern province of Hai Duong to ensure stocks.

HPG shares dropped 0.23% to VND21,650 ($0.9) at the close on Friday.