A market downturn led to an array of steel firms posting negative growth figures in 2018 and has left many in an impasse.

A recent report on the performance of Vietnam Steel Corporation (VnSteel) throughout 2018 indicates that the combined after-tax profits of 38 firms owned by or affiliated to VnSteel totaled only VND1.212 trillion (US$52.97 million), equal to 79 per cent of the figure recorded in 2017.

Only 14 of the 38 enterprises achieved their targets set for 2018 and reported growth in revenues as well.

Meanwhile, Nha Be Steel JSC, Phu My Flat Steel Company, VnSteel Thang Long Coated Sheets JSC, and Binh Tay Steel Netting JSC are among the firms that failed to show signs of growth in 2018. Southern Hot Strip Steel Corporation, a VnSteel subsidiary, and eight other firms affiliated with VnSteel even suffered losses.

VnSteel has cut back on putting large-scale projects into operation in recent years while some of the corporation’s projects have been halted due to their poor performance. Therefore, they have made no positive contribution to the parent company’s volume growth and market shares.

Nguyen Dinh Phuc, general director of VnSteel, cited the sluggish state of the wider steel market as the main cause for the poor performance of many VnSteel subsidiaries and affiliates. Phuc added that another factor was the firms’ inefficient administration and market forecast.

He pointed out that many subsidiaries and affiliates of VnSteel had poor performances as their current technology and equipment are out of date. These firms encountered huge challenges when rivals had new steel plants put into use with high capacity and state-of-the-art production lines.

In 2019, VnSteel stated it will persist with its restructuring scheme with a focus on mobilizing capital and resources for the expansion of its core business.

VnSteel this year looks set to reap VND21 trillion (US$917 million) in combined revenues and VND150 billion (US$6.55 million) in pre-tax profits. Focus will be put on making amendments to VnSteel’s overall business strategy and bettering linkages with its subsidiaries and affiliates.

The general director suggested the Government, ministries, and stakeholders should advocate a collaboration between VnSteel, Viet - Trung Mining and Metallurgy Co., Ltd, and Thai Nguyen Iron and Steel Joint Stock Corporation in order to handle the shortcomings and barriers which are currently hindering the execution of a second phase of the Thai Nguyen steel project and the Lao Cai steel mill project.

VOV