Vietnam's steel sector has endured a difficult period, but the worst days are over, according to Tran Dinh Long, chairman of Hoa Phat Group, the biggest Vietnamese steel producer, as its performance improved from a loss in January to a profit in March.
At its annual general meeting on Thursday, Hoa Phat Group, listed on the Ho Chi Minh Stock Exchange (HoSE) as HPG, approved a business plan for 2023 with a post-tax profit of VND8 trillion ($340.93 million) on a revenue of VND150 trillion ($6.39 billion), down 5% and up 6% compared to 2022's actual figures, respectively.
The meeting also passed a plan to use its undistributed post-tax profits accumulated as of December 31, 2022 (after deducting VND42.2 billion or $1.8 million for funds) for business operations, indicating no dividend payment for last year.
“2022 was a harsh year for the steel sector, so the underperformance at HPG was not bad, and even good in some aspects,” Long said.
Regarding the lack of dividend payments, the HPG executive noted that at the previous shareholder meeting, he had mentioned that the firm had to focus on the Hoa Phat Dung Quat 2 steel complex project, which may take up to $3 billion in assets.
Long added that there are not many projects in Vietnam of this size, and HPG will be implementing the project without the help of foreign investment.
He also noted that the mega Hoa Phat Dung Quat 2 project is set to complete in the first quarter of 2025 and would then need two years to reach its maximum capacity, while some unexpected changes to the timeline are possible.
"HPG is willing to compete with foreign and domestic players and from now on, the firm will invest in high-quality steel, toward strengthening exports of these products."
He assured shareholders that HPG has a strong foundation and massive experiences, while the worst period of the steel sector has passed. "HPG’s inner power is great and the sector has a great future, but dependence on the demand is always there.”
Long also said he appreciated the positive sentiments of HPG investors on the stock market. The number of shareholders increased from 160,000 in 2021 to 180,000 after a tough year for the steel sector.
On the Ho Chi Minh Stock Exchange, HPG shares closed at VND20,800 ($0.89) on Friday.
Hoa Phat Group, the largest Vietnamese steelmaker, recorded a post-tax profit of VND8.4 trillion ($358 million) in 2022, down 76% year-on-year. For the whole 2022, the group posted a revenue of VND142 trillion ($6.06 billion), falling 5% year-on-year, after recording a revenue of VND26 trillion ($1.11 billion) in the fourth quarter, down 42%.
Steel sales in Vietnam fell 23.2% year-on-year to 3.85 million tons in the first two months of this year, including one million tons for export, down 10.4%, according to the 100-member Vietnam Steel Association.