Pressing issues trouble Hoa Phat Group

According to steelonline.vn, since mid-May constructive steel prices in the country have adjusted 15-times, decreasing by around $282.6 per tonne from the peak amount, equivalent to 25-30 per cent. The decrease in local steel prices is the same as the decline in the world's prices, due to a lot of inventory.

This is affecting the profit margin of steel businesses, including Hoa Phat Group. Business results in the second quarter of HPG revealed a lot of difficulties.

Despite the consolidated net revenues of $1.63 billion, which went up 6.5 per cent on-year, consolidated gross profit dropped by 43 per cent in value, and its margin decreased by 17.5 per cent as compared to 32.7 per cent last year, which is the lowest figure since the second quarter of 2019. This pulled after-tax profits down by 58.7 per cent to $174.9 million.

As of end-June, the value of Hoa Phat's inventory went up to $2.5 billion, up 36.6 per cent of the beginning of the year. This is the second-largest amount on HPG's asset structure.

Due to a lot of inventory and the drop in prices during the last months, the business results of HPG in the third quarter are forecast not to be bright.

Based on the low price of steel, Hoa Phat will have to use reserve funds and discount inventory, if the prices stay as low as now until the end of the quarter.

Additionally, the adjustment of monetary policies and the increase of the interest rate of the Fed to curb inflation have enabled the US dollar value to rise. Thus, HPG had to suffer further losses from the exchange rate difference and the revaluation of foreign currency debt items.

In the second quarter, the exchange rate loss of HPG went up to $55.2 million, 6.5-fold of last year. Total financial costs rose to $88.34 million, nearly 2.5 times as much as last year.

As of the second quarter, the debt balance of the company soared to $3 billion, an increase of $556.5 million from the beginning of the year, mainly contributed by short-term debts of around $2.46 billion, which made up 80.8 per cent of the total.

Vina Roma proposes $2 billion Quang Tri iron and steel complex Vina Roma Quang Tri Steel JSC has proposed building an iron and steel complex in the southeast province of Quang Tri with the total investment capital of just over $2 billion.

Steel producers show substantial efforts towards integration Nghiem Xuan Da, chairman of the Vietnam Steel Association, talked with VIR's Yen Thuy about the factors instrumental to the sector’s notable results in 2021 and how producers can further excel in exports.

Hoa Phat plans to develop two projects worth $5.2 billion in Phu Yen Steel maker Hoa Phat Group proposed Phu Yen People’s Committee to develop a seaport and technical infrastructure for Hoa Tam Industrial Zone with the total investment capital of VND120 trillion ($5.2 billion).