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Vietnam steel producers report strong profit growth

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Workers of Vietnam's Hoa Phat Group check steel inventories. HPG

Vietnam steel producers report strong profit growth

Despite disruptions caused by the fourth wave of the Covid-19 pandemic, Vietnam’s steel producers still reported extraordinary profits.

In its third-quarter financial report, Hoa Phat Group (HPG) posted a rise of 56 per cent year-on-year in revenue to 38.9 trillion dong ($1.7 billion), resulting in record profit after tax of 10.35 trillion dong, 2.7 times higher compared to last year.

As of September 30, the leading steel producer recorded revenue of over 105.8 trillion dong, up more than 60 per cent. Its profit after tax jumped 200 per cent over last year to 27.1 trillion dong, which exceeded 45 per cent of the year’s plan.

In the past nine months, HPG produced 6.1 million tonnes of crude steel, up 50 per cent over the same period last year. Sales of steel products reached 6.3 million tonnes during the period, up 43 per cent. Of which, construction steel sales rose 12 per cent to 2.8 million tonnes, while hot rolled coil (HRC) sales reached nearly two million tonnes.

Tien Len Steel Group (TLH) also reported outstanding performance last quarter.

Even though the company’s consolidated net revenue increased 1.5 per cent year-on-year to nearly 909.4 billion dong, its profit after tax surged more than 8.3 times to 105.5 billion dong.

TLH said the rise in revenue was driven by higher steel prices, while low inventories resulted in a sharp drop in the cost of goods sold. During the period, the company also minimised a number of expenses, leading to a sharp gain in net profit.

In the first nine months of 2021, its revenue climbed 15 per cent to 3.28 trillion dong, with net profit up to 422.3 billion dong from just nearly 997 million dong in the same period last year. With the result, the company exceeded its whole year target.

This year, TLH set a target of 250 billion dong in profit after tax.

Similarly, Thai Nguyen Iron and Steel (TIS) and Me Lin Steel (MEL) witnessed strong growth in business results.

TIS said in its third-quarter report that the company’s net revenue jumped 46.5 per cent over last year to nearly 3.1 trillion dong, with net profit reaching nearly 10 billion dong, 25 times higher than that of last year.

During the period, its profit from financial activities rose strongly, while interest expenses declined.

In the first nine months, it posted an increase of 37.5 per cent year-on-year to over 9.6 trillion dong. Given the sharp fall in expenses and higher steel prices, its profit after tax rose seven times over last year’s to 113 billion dong.

Meanwhile, MEL recorded a loss of 18.7 per cent in net revenue to 196 billion dong. But thanks to a significant cut in expenses, with financial expenses and general and administrative expenses both down more than half, its profit after tax was still 10.6 times higher than the same period last year to over 18.7 billion dong.

According to MEL, in the third quarter, domestic steel prices rose sharply compared to the same period of 2020, while the company’s inventories were still relatively low, so profits surged. At the same time, the company also maximised production and business expenses like sales and interest expenses, and increased efficiency.

Le Xuan, a senior trader, said that steel enterprises were likely to benefit as China was tightening its annual steel production output.

“Environmental problems and limited energy consumption are forcing Chinese enterprises to reduce output, causing a fall in the global steel supply, as China is the world’s largest steel exporter,” Xuan said.

“It will support our steel producers.”

On the stock market, HPG and TLH are listed on the Ho Chi Minh Stock Exchange (HoSE), while MEL is traded on the Hanoi Stock Exchange (HNX) and TIS is on UPCOM.

These stocks have gained strongly since the beginning of the year with HPG shares and TIS shares up 34 per cent and 53.2 per cent, respectively. TLH shares even jumped more than 197.3 per cent, while MEL shares rose nearly 130 per cent.

“Steel stocks may still have room to increase thanks to the expectation of profit growth and public investment is expected to increase sharply post-pandemic,” said Xuan.

She added that the restart of real estate projects also increased demand for steel products.



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