Steel giant Vnsteel's Q1 profits drop 65%

Vietnam Steel Corporation (Vnsteel), the country's leading steelmaker, reported an after-tax profit of VND67.9 billion ($2.9 million) in the first quarter of 2023, falling 65% year-on-year.

The company recorded net revenue of VND8.34 trillion ($355.5 million), down 32%, according to its Q1 consolidated financial statement.

Notably, its joint ventures and associates posted combined losses of VND15.9 billion ($677,600) in the quarter, while in the same period last year they recorded a profit of VND56 billion ($2.39 million).

Vnsteel's largest shareholder is the State Capital and Investment Corporation (SCIC), with a 93.93% stake. The corporation is listed on the Unlisted Public Company Market (UpCOM) as TVN. At the latest trading session last Friday, TVN shares finished at VND5,100 ($0.22).

As of March 31, 2023, the firm's total assets stood at VND24.28 trillion ($1.03 billion), up 4% compared to the beginning of the year. Of which, cash and cash equivalents accounted for VND2.27 trillion ($96.9 million), or 9% of total assets, and inventories hit more than VND5.36 trillion ($228.3 million).

The company's liabilities stood at VND14.33 trillion ($610.6 million), while undistributed after-tax profit at the end of Q1 reached approximately VND2.62 trillion ($111.65 million).

At a conference to review 2022 and deploy tasks for 2023, Vnsteel's deputy general director Le Van Thanh said the steel market had experienced unexpected fluctuations. Prices of energy and raw materials used for steel production like coal, iron ore and scrap steel had increased strongly and suddenly at the start of the year, with some recording record hikes.

"But prices of steel products have dropped quickly, hitting a two-year low. Downturn is the major trend of selling prices from May to the end of last year. These factors had a strong impact on Vnsteel's revenue and profit, " Thanh noted.

In 2023, Vnsteel has set a consolidated revenue target of VND35.8 trillion ($1.53 billion) and consolidated pre-tax profit of VND50 billion ($2.13 million).

The revenue target set for the parent company is VND1.9 trillion ($80.98 million).

Meanwhile, Hoa Sen Group, Vietnam's leading steel sheet producer, posted consolidated net revenue of VND6.98 trillion ($297.5 million) in Q1, down 45% year-on-year, and after-tax profit of nearly VND251 billion ($10.7 million), up 7%.

In contrast, Nam Kim Steel made a loss of VND49 billion ($2.09 million), marking its third consecutive quarter in the red. The company earned a net revenue of VND4.38 trillion ($186.44 million), down 39% year-on-year.

Vietnam's largest steel producer Hoa Phat Group returned to a post-tax profit of VND383 billion ($16.32 million) in Q1, following severe losses in Q3 and Q4 of 2022. But the figure was a 21-fold decrease year-on-year. It posted a revenue of VND26.87 trillion ($1.14 billion) in the quarter, down 39%, due to ongoing limited demand.