Hoa Phat Group owned by billionaire Tran Dinh Long made public the business results in the third quarter with a post-tax profit of VND2 trillion, an increase of 38 percent over the second quarter. Meanwhile, it reported a loss of VND1.786 trillion in the same period last year.

As such, in the first nine months of the year, Hoa Phat made a post-tax profit of VND3.83 trillion.

However, sales have been going slowly because of the low demand, the moderate credit growth rate and the weak real estate market. It will take some more time for money from public investments to pour into to infrastructure projects. 

The output of nearly all Hoa Phat’s steel products in the third quarter decreased in comparison with the same period last year. The steel manufacturer reported a revenue decrease of 16 percent to VND28.766 trillion in the third quarter, and decrease of 27 percent to VND85.43 trillion in the first nine months.

However, despite low revenue, Hoa Phat’s profit was still good as the steel industry has been experiencing tough days. Hoa Phat is known as the steel manufacturer with the largest structural and tube steel market share, 33.3 and 27.3 percent, respectively.

Hoa Sen Group’s financial report showed that its consolidated post-tax profit in the fourth quarter of its 2022-2023 fiscal year (from July 1 to September 30) was VND438 billion, which meant a gradual recovery compared with the loss of VND887 billion in the same period last year. Its revenue in the quarter reached VND8.107 trillion. 

The accumulated consolidated revenue of Hoa Sen in the 2022-2023 fiscal year (from July 1, 2022 to September 30, 2023) was VND31.651 trillion, while the post-tax profit was VND28 billion.

Unlike large manufacturers, most steel companies experienced a difficult period in the third quarter. Big losses, big debts, big financial costs and low selling prices were the common problems.

VNSteel has once again reported a loss in the third quarter, but the loss (VND172 billion) was smaller than that (VND567 billion) of the same period last year. The steel manufacturer incurred a pre-tax loss of VND431 billion by the end of September.

VNSteel has more than VND6.5 trillion in the form of unfinished capital construction cost in a project on Tisco upgrading and expansion (Phase 2).

Tisco (TIS), which was once a big player, incurred a pre-tax loss of VND57 billion in the third quarter and VND193 billion in the first three quarters.

Most enterprises in the steel industry are facing problems, including high input costs, high financial costs, exchange rate fluctuations and low selling prices caused by weak demand.

SMC Trading Investment JSC has reported a loss of VND178 billion for the third quarter. Prior to that, the enterprise anticipated difficulties and set a moderate target of ‘no loss’ in the second half of the year after it lost VND400 billion in the first half.

The quiet real estate market and unprecedented difficulties of real estate firms have had adverse impacts on steel manufacturers and traders.

SMC has to make provisions for receivables related to a series of real estate firms and real estate projects, including Delta-Valley Binh Thuan, Da Lat Valley real Estate and AQUA City.

In September, the slight recovery of the world’s steel prices and improvement of domestic demand helped the prices of many steel shares, including HPG and HSG, increase rapidly.

However, demand is still relatively low in comparison with 2022 and early 2023. The low coke coal prices helped some leading manufacturers in the industry make a profit.

While many companies have reported losses, analysts still believe that the steel industry will recover and prosper in 2024

Rong Viet Securities believes that the steel market will continue to face difficulties in the second half of 2023, but recover strongly in 2024. The recovery of the domestic market, the sharp falls of material prices, plus the recovery of the real estate market as more credit pours into the field are factors supporting the industry.

The sales in September began seeing improvement. According to the Vietnam Steel Association (VSA), September was the first month that witnessed growth in finished steel sales (2.2 million tons, up 5 percent over the same period last year). The exports also increased sharply by twofold to 658,000 tons.

Manh Ha