Formosa Ha Tinh reports $1 billion in accumulated losses

Formosa Ha Tinh's profit and accumulated losses. Unit: trillion VND

The revenue of Formosa Ha Tinh Steel Corporation (FHS) in 2019 was reported to be VND71.66 trillion ($3.115 billion), increasing 11.66 per cent on-year (VND64.175 trillion [$2.8 billion]). However, the pre-tax profit of the corporation dropped VND11.54 trillion ($501.74 million) in 2019 and VND2.73 trillion ($118.7 million) in 2018. Thus, the accumulated losses of Formosa Ha Tinh have hit VND25.4 trillion ($1.1 billion), according to cafef.vn, equivalent to 20 per cent of its charter capital.

Meanwhile, another steel manufacturer Hoa Phat Group generates more than VND9 trillion ($391.3 million) in profit every year, although its charter capital is VND33.13 trillion ($1.44 billion) only, equaling one-third of Formosa.

The reason of Formosa Ha Tinh's huge losses in 2019 is the sharp increase in costs, which reduced the accumulated profit to VND800 billion ($34.8 million), and its margin was 1.1 per cent only.

In the first months of the year, the manufacturing and sales volume of Formosa Ha Tinh reduced significantly due to the decreasing price of finished steel and the rising price of materials. Besides, the pandemic and the need for maintenance caused the factory to shut down for a month between January and February.

According to the Vietnam Steel Association, Formosa Ha Tinh produced 369,650 tonnes of construction steel, down 5.12 per cent on-year, making up 6.5 per cent of the total market.

Formosa Ha Tinh received its investment certificate in 2008 as one of the biggest froreign-invested enterprises in Ha Tinh province, with major shareholders comprising Taiwan's Formosa Plastic holding 70 per cent, and Taiwan Steel 20 per cent, along with a Japanese steel company holding 4 per cent.

Formosa Ha Tinh currently runs two blast furnaces at the annual capacity of 7.1 million tonnes of crude steel. Its output reached almost 5.1 million tonnes (up 29.6 per cent on-year) in 2019 and is expected to be 22.5 million after the third blast furnace is built.