Local steel sector saw gloomy prospect in first quarter

The US-China trade war and fluctuation in material prices have set a burden on Vietnamese steel companies, reducing profits and even causing losses in 2019’s first quarter.

local steel sector saw gloomy prospect in first quarter hinh 0
Local steel firms set conservative business targets for 2019. (Photo: VIR)

The first quarter of 2019 recorded five companies reporting losses, including Nam Kim Group (NKG), which ran the highest loss. During the first quarter, the company lost VND102 billion ($4.43 million) due to the fluctuation of material prices. This was also the second time NKG has reported losses, as in the fourth quarter it lost VND173 billion ($7.52 million).

The skyrocketing price of raw materials have also caused Pomina Steel to suffer VND82 billion ($3.56 million) in losses in 2019’s first quarter. This is the first time Pomina Steel reported losses in four years. During the corresponding period of last year, the company reported a profit of VND226 billion ($9.82 million).

The same situation also happened to Dana-Y Steel JSC (DNY) which posted a loss of VND57 billion ($2.48 million) in this year’s first quarter. According to the firm, the Danang People’s Committee has suspended its manufacturing activities, mainly because of its losses. The Danang authority on last November 22 officially imposed administrative fines on DNY for environmental violations.

Vietnam-Italy Steel JSC (VIS) and also suffered a loss of VND34 billion at the same time for the same reason. In addition, VIS’ representative also clarified that in 2019’s first quarter, the temporarily halt to construction works during the Lunar New Year reduced the consumption of steel, leading to losses for the company.

Despite not suffering losses, the other firms reported pretty low profits compared to the same period of last year. Accordingly, Vietnam Steel Corporation’s (VNSTEEL) profit in 2019’s first quarter fell by 80 per cent on-year. For instance, Hoa Sen Group (HSG) also reported a 53 per cent fall in its profit on-year.

Most recently, VIS targets keeping its losses at around VND92.5 billion ($4 million) in 2019, after last year’s VND326 billion ($14.17 million) of loss. HSG also plans to reach VND31.5 trillion ($1.37 billion) in revenue in 2019, down 8 per cent against last year, and VND500 billion ($21.74 million) in after-tax profit.

Currently, VNSTEEL and Dai Thien Loc Group have yet to organise their shareholders’ meetings, so there is no information on their business performance or targets yet.

VIR

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