Hoa Phat Group sparks growth in steel industry

HANOI: Following a period of difficulty, the steel industry is currently seeing encouraging signals as listed steel companies have experienced growth in total profits for the second quarter in a row compared to the previous corresponding quarter.

It is estimated that in the fourth quarter of 2023 (4Q23), the industry’s total profits will reach about 2.5 trillion dong, up 22% from the previous quarter and a significantly more positive outlook than the loss of over 5 trillion dong recorded in the same period of 2022.

This also marks the highest level observed in the past six quarters.

Most steel producers have shown strong signs of profit recovery from the same period in 2022, especially Hoa Phat Group (HPG) with a nearly 5 trillion dong increase in net profit.

Many other companies, including Hoa Sen Group, Nam Kim Group, VNSteel and Ton Dong A, have also experienced significant profit rebounds in the hundreds of billions of dong compared with the final quarter of 2022.

However, the majority of steel companies have reported a slowdown in their recovery trajectory compared to 3Q23.

In 4Q23, Hoa Sen’s profits plummeted by 76% from the previous quarter, while both Pomina and SMC Trading Investment JSC reported heavy losses of more than 300 billion dong each.

Even though VNSteel managed to reduce its losses significantly, it has yet to achieve profitability.

Against this backdrop, Hoa Phat emerges as a rare bright spot, with the leading steel company achieving net profit of nearly 3 trillion dong in 4Q23, a 48% increase from the previous quarter and the highest result in the last six quarters.

It contributed the majority of the steel industry’s profits in the final quarter of 2023.

Amid the slower pace of recovery, many steel companies remain cautious by maintaining relatively low inventories, despite the slightly more positive price trend compared to the previous quarter.

According to statistics, the total value of steel industry’s inventory by the end of 2023 was approximately 66 trillion dong, a slight decrease from the preceding quarter. The amount already included provisions for price reductions.

Steel companies have sustained inventory values around 65 trillion dong to 70 trillion dong for five consecutive quarters, significantly lower than in the previous period. Particularly, the figure dropped by around 50 trillion dong from the peak set in the middle of 2022.

The trio of Hoa Phat, Hoa Sen and Nam Kim continue to incrementally increase their inventory reserves, although the growth is not substantial.

Among them, the leading player, Hoa Phat, witnessed the highest surge in inventory during the final quarter of 2023, yet the value has not reached the trillion dong mark.

Conversely, most of the other top companies experienced a significant decline in inventory compared to the previous quarter.

VNSteel, Ton Dong A, Pomina, SMC, Thep Tien Len and Tisco all saw their inventory values decrease by hundreds of billions of dong.

SMC, in particular, had the biggest reduction, amounting to over 400 billion dong, or 22%, from the previous quarter. This marks the first time in several years that the company recorded an inventory value below a trillion dong. — Viet Nam News/ANN