Hoa Phat's Profit Improved Enormously in Q2 2023 Despite the Unsustainable Domestic Steel Market
Steel NewsDate: 08-08-2023 by: Ngan Le
According to the new report in Quarter 2/2023, the group declared they had achieved more than $ 1.2 billion in revenue. The Hoa Phat's profit also had a spectacular growth with more than $ 77 million, which was 3.8 times compared to the previous quarter 1.
Hoa Phat's profit improved enormously although of the unsustainable domestic steel market
Hoa Phat Group has just announced business results in the second quarter of 2023 with revenue of 29,800 billion VND (more than $ 1.2 billion), down 21% compared to the same period last year but slightly increased by 9% compared to the first quarter of 2023 (Q1 revenue reached VND 26,865 billion). The total revenue in the first 6 months of Hoa Phat recorded 56,655 billion VND (more than 2.3 billion USD); compared to the plan's target at the beginning of the year, Hoa Phat achieved 38% of the plan.
Similar to revenue, Hoa Phat's profit showed a substantial improvement despite the weak steel consumption in the country, with more than 1,830 billion VND in profit after tax (77 million USD). Although the profit in the second quarter had a deep decline compared to last year's period, it improved a lot with 73% growth in the first quarter of this year.
In addition, the sales volume for the total of 6 months this year, including construction steel, billet, and hot rolled coil (HRC), reached 2.9 million tons and decreased by 27% compared to the 6 months in 2022. Hoa Phat has realized that steel consumption is still weak, and the group has actively reduced steel production activities. Specifically, in the first 6 months, Hoa Phat produced 2.86 million tons of crude steel, down 34% compared to the same period.
Hoa Phat promotes implementing the steel mill projects
The positive revenue signals in the first half of this year motivate Hoa Phat to continue implementing steel production strategies. Hoa Phat focuses on implementing the Hoa Phat Dung Quat 2 iron and steel production complex project with an HRC capacity of 5.6 million tons/year. When the project is completed, it will increase Hoa Phat's total crude steel capacity to 14 million tons/year. Currently, Dung Quat 2 project has completed 30% of the schedule.
Steel products have always been the main product line that brings the majority of Hoa Phat's profit, so in the near future, Hoa Phat will continue to invest in production lines as well as speed up implementing factory processes. Besides the Hoa Phat Dung Quat 2 project, the group has continued to research and make up the Dung Quat 3 project to help increase the total crude steel capacity to 21 million tons/year.
In addition, the group is orienting to produce high-quality steel - a steel that possesses outstanding hardness, it's used as a cutting material in the production process. The tool steel market is predicted to be a potential market in the coming years; adding the tool steel segmentation to one of the main target markets will make Hoa Phat solve the consumption problem instead of depending on real estate.