The Vietnam steel industry faces challenges in the third quarter of 2023
Steel NewsDate: 30-08-2023 by: Nhu Quynh
KIS Vietnam Securities Joint Stock Company believes that the steel industry will face many difficulties in 2023 if sales volume does not grow significantly.
In the newly updated report, KIS Securities said that the revenue growth rate in the second quarter of 2023 of steel enterprises on the stock exchange decreased by 27.7% over the same period last year.
The top nine steel companies in Vietnam all had negative growth. Hoa Phat recorded negative revenue growth of 21.1% over the same period last year. This is also the leading enterprise in the steel industry due to its dominant position. Similarly, Nam Kim also had negative revenue of 23.5%, while Hoa Sen had the most profound drop in revenue with negative growth of 29%.
Although domestic demand is low, the number of products exported to other countries is relatively high. Strong growth of the steel industry through the export channel was seen in the total export volume of 2.1 million tons, up 25% year-on-year. Particularly for HRC products, 1.1 million tons have been exported, an increase of 128% over the same period last year and nearly 55% compared to the first quarter of 2023.
In terms of profit, the growth momentum of total profit in the second quarter of 2023 for nearly half of the 24 Vietnamese steel enterprises recorded a decline. Total net profit reached 498 billion dong, down 89% over the same period last year but up slightly by 7% compared to the previous quarter.
However, nearly half of the listed steel companies suffered losses in the second quarter. Among the top 9 enterprises in the steel industry, Nam Kim has the highest revenue, with a profit of 125 billion dong after losses in the previous 3 quarters, while Hoa Sen only has a profit of 14 billion dong. Hoa Phat's net profit dropped 64% over the same period last year (1,447 billion dong) but recovered significantly compared to the first quarter.
KIS also forecasts that difficulties and challenges for the steel industry will still be present in the third quarter when the domestic market's demand is still fragile due to the rainy season's impact, and the product's selling price will affect the margin. Enterprise profits. The export channel is still a bright spot for steel enterprises. It is forecasted that the total consumption volume in the third quarter may decrease by 9% compared to the previous quarter to 5.8 million tons.
For input materials, KIS believes that input prices of steel industry materials will increase due to positive signs from the Chinese market. However, the output prices of steel products will not increase at the same rate as the market input prices. Therefore, the profit margin of steel producers will be slightly affected by falling selling prices but will remain flat in the third quarter thanks to low and stable input material costs. KIS forecasts that the HRC price recovery in the third quarter will positively affect the revenue and profit of companies from the end of September and throughout the fourth quarter of this year.
KIS said that the steel industry is still facing many difficulties in the context of decreasing market demand. In addition, slowing global economic growth and domestic issues related to the bond and real estate sectors may further threaten the industry's business results, and weak demand will remain a significant concern this year.