Top steelmaker Hoa Phat expects 2023 improvements to continue with higher sales, profits

Vietnam’s leading steel maker, Hoa Phat Group, expects to carry further forward the year-on-year progress it made in 2023 with improved sales and better prices this year.

It reported production of 6.7 million tons of crude steel in 2023, down 10% from 2022 and equivalent to about 80% of its capacity.

The sales of hot rolled coin (HRC) steel, construction steel, high quality steel and steel billet reached 6.72 million tons, down 7% year-on-year. Of this, the sales of construction and high quality steel reached 3.78 million tons, down 11%, while that of HRC steel rose 6% to nearly 2.8 million tons.

In 2023, Hoa Phat supplied 685,000 tons of steel pipes, down 9% year-on-year; and 329,000 tons of galvanized steel sheets of all types, unchanged from 2022 figures.

In December alone, Hoa Phat produced 648,000 tons of crude steel, an increase of 4% compared to the previous month. Its sales of HRC steel, construction steel and steel billets reached 760,000 tons, up 7% versus November and marking the highest figure since the beginning of the year. Sales of construction steel and high quality steel rose 13% month-on-month to 462,000 tons, the highest in 20 months.

The group’s report said that the domestic market, including civil engineering and public investment projects, has shown more positive signs after a long quiet period.

Hoa Phat construction steel products have been used in projects such as Long Thanh International Airport in the southern province of Dong Nai, the expansion of Dien Bien airport in the northwestern province of Dien Bien, the upgrade of Tan Son Nhat International Airport in Ho Chi Minh City, and construction of the North-South Expressway.

The group exported 113,000 tons of construction steel and high-quality steel to about 30 countries and territories including Canada, South Korea, Japan, Singapore, Australia, and Sri Lanka.

It also shipped 103,000 tons of HRC abroad in December, contributing nearly 40% of the month’s total sales. Exports of downstream HRC products like steel pipes and galvanized steel sheets reached 68,000 tons and 24,000 tons respectively.

December marked the 9th consecutive month of increased sales for Hoa Phat. Steel consumption bounced back in both domestic and export markets starting Q3 2023, thanks to government policies aimed at removing difficulties, promoting economic growth and accelerating public investment, especially in transport infrastructure, the group said.

After two consecutive quarters of losses in the second half of 2022, Hoa Phat's business results improved gradually in the first three quarters of 2023, with profits of nearly VND400 billion ($16.43 million) in Q1, VND1,450 billion in Q2 and VND2 trillion in Q3.

In the first nine months of 2023, the group posted revenues of VND84,569 billion ($3.47 billion) and an after-tax profit of VND3,831 billion.

However, compared to the same period the previous year, its revenue and profit dropped 27% and 63%, respectively, mainly due to the high bases set in the first half of 2022.

In Q4 2023, steel prices increased again after bottoming in Q3. In December, Vietnam's leading steel manufacturer adjusted steel prices upward three times.

Broker VNDirect Securities believes that Hoa Phat's profit in 2024 will increase sharply over the low base of 2023, thanks to increased sales and average selling prices.

The group currently has a crude steel capacity of 8.5 million tons per year, the largest in Vietnam and Southeast Asia. It has invested in the Dung Quat 2 project with a capacity of 6.5 million tons of HRC per year, increasing its total HRC capacity to 14-15 million tons. The $3.5 billion project is expected to begin operations in the first quarter of 2025.