Pomina steel products. Pomina reported loss of VNĐ82 billion in the first quarter while it posted more than VNĐ226 billion in the same period of last year. — Photo thepmiennam.net.vn

HÀ NỘI – Listed steel companies have reported disappointing business results in the first quarter despite strong growth in the domestic market, which they have attributed to the high cost of capital.

According to the Việt Nam Steel Association (VSA), domestic steelmakers produced 5.07 million tonnes in the first four months, registering growth of 37 per cent year-on-year. Steel consumption also rose 29 per cent to reach nearly five million tonnes.

Ending March, seven of the 11 listed steel firms posted higher revenues compared to the same period last year.

SMC posted the highest revenue growth of 27 per cent, reaching more than VNĐ4 trillion (US$178.3 million) in the first three months, driven by a 25 per cent rise in sales volume.

Hòa Phát Group (HPG) and Hoa Sen Group (HSG) – the two biggest steel producers by market value – grew 15 per cent and 12 per cent, respectively. HPG’s Q1 revenue reached nearly VNĐ15 trillion ($643.8 million), while HSG reached VNĐ7.7 trillion ($330.5 million).

On the other end of spectrum, Dana - Ý Steel (DNY), Vietnam – Italy Steel (VIS) and Nam Kim Steel (NKG) slumped, of which Dana - Ý Steel fell 99 per cent compared to the same period last year. Revenues at the other two companies decreased 21 per cent and 18 per cent, respectively.

Production at Dana - Ý Steel was halted for six months in November last year by Đà Nẵng due to pollution issues. Its revenue in this period came from selling off its inventory.

Meanwhile, slumps in operations of Vietnam – Italy Steel and Nam Kim Steel were due to lower export volumes.

The three companies incurred losses during the period, of which Nam Kim posted a loss of VNĐ102 billion compared to a profit of VNĐ131 billion in the same period last year.

DNY reported a loss of nearly VNĐ57 billion and VIS lost VNĐ34 billion.

Other loss-making companies included Pomina Steel (POM) and Đại Thiên Lộc (DTL).

According to the companies, the price of raw materials had increased substantially while the price of steel products had not changed that much.

Pomina reported a loss of VNĐ82 billion in the first quarter while it posted more than VNĐ226 billion in the same period last year. This was also the first loss after four years of posting profits.

Other companies, though not incurring losses, suffered declines in profits of between 17 per cent and 80 per cent. Pre-tax profit at Hòa Phát Group declined 17 per cent in the first quarter to VNĐ2.2 trillion while Hoa Sen Group was down 53 per cent to VNĐ54 billion.

Lower targets in 2019

Predicting difficulties in 2019, most steel companies have set lower profit targets compared to last year.

Pre-tax profit at Hòa Phát Group is expected to decrease 33.5 per cent in 2019 to VNĐ6.7 trillion.

Pomina also expects a 12 per cent decline in pre-tax profit this year to VNĐ400 billion.

Meanwhile, Vietnam – Italy Steel expects profit to fall from VNĐ326 billion in 2018 to VNĐ92.5 billion in 2019.

Vietnam Steel Corp, Dana –Ý Steel, Đại Thiên Lộc and Nam Kim Steel have yet to announce their 2019 targets.

Vietnam Germany Steel Pipe, Thái Nguyên Iron and Steel and Hoa Sen Group have all targeted higher profits. VNS