Posco’s Vietnam subsidiary records $9 mln operating profit in H1

Posco Yamato Vina Steel JSC, a subsidiary of South Korea’s major steelmaker Posco, recorded operating profits of $5 million in the first quarter and $4 million in Q2 of this year.

According to parent company Posco Holdings' H1 report, Posco Yamato Vina Steel posted a revenue of $76 million in Q1 and $82 million in Q2.

The revenue and operating profit figures of Q1 and Q2/2023 went down from $104 million and $7 million in Q4/2022, respectively.

Posco highlighted that the Vietnamese subsidiary had to increase export share through diversification of export destinations to mitigate the impact of Vietnam’s economic downturn.

Sales volume in the Vietnamese market dropped from 54,000 tons in Q1/2023 to 47,000 tons in Q2, while the overseas sales rose from 32,000 tons to 54,000 tons.

The sales prices of Posco Yamato Vina Steel’s products fell 3.5% in the period year-on-year.

Globally, Posco recorded an operating profit of KRW1,326 billion ($1.04 billion) on a revenue of KRW20,121 billion ($15.82 billion) in Q2/2023.

Posco Yamato Vina Steel, 51% owned by Posco, 30% by Japan’s Yamato Kogyo, and 19% by Thailand’s Siam Yamato Steel, is located in Phu My 2 Industrial Park, Ba Ria-Vung Tau, southern Vietnam. The firm manufactures hot-rolled structural steel and sheet pile, with an annual capacity of over one million metric tons.

Posco is among the biggest South Korean investors in Vietnam. It has invested about $2 billion in the country and will continue expanding, Posco Vietnam CEO Yoon Chang Woo said at a forum on Vietnam-South Korea economic cooperation in October 2022.

Posco Vietnam Co., Ltd., a wholly-owned subsidiary of Posco Holdings, recorded a net loss of KRW39.73 billion ($30.44 million) in 2022 against a net profit of KRW42.19 billion ($32.44 million) in 2021.

Posco also operates Posco VST, established in 2009 in the southern province of Dong Nai with an annual production capacity of 250,000 tons of stainless cold rolled steel.

Posco’s first large investment was a factory in the southern coastal province of Ba Ria-Vung Tau. The plant, opened in 2006, is Southeast Asia’s largest cold-rolled mill with an annual capacity of 1.2 million tons.

Steel sales in Vietnam fell 17.5% year-on-year to 12.48 million tons in the first half of this year, according to a report by the 100-member Vietnam Steel Association (VSA).

During the period, steel output reached 13.1 million tons, down 20.9% year-on-year. The association attributed the underperformance to lower demand, resulting from the gloomy real estate market, challenges in the corporate bond market, and inflation impacting the civil construction market.

In June, steel sales and output both decreased 6.41% and 9.52% year-on-year to 2.16 million tons and 2.01 million tons, respectively.

The VSA expected steel output in Vietnam to go up 2-3% this year, fulfilling domestic and export demands. However, prices will fall due to weak demand, Chinese firms pushing exports, domestic consumption going down resulting from the ailing real estate market, and trade barriers in export markets.