VNSteel's Profit Falls Sharply in Q2 2023
Steel NewsDate: 08-08-2023 by: Ngan Le
In the second quarter of 2023, VNSteel lost VND 255 billion, along with the net revenue decreased by 29% compared to the same period last year. Besides, the company also recorded a loss of 324 billion dongs from associated companies in the steel industry.
The VNSteel's report has made many investors disillusioned
According to the report data, VNSteel's net revenue reached 6,754 billion VND, and it decreased 29% over the same period. After deducting the cost price, gross profit was only 94 billion VND and decreased sharply by 57% compared to the previous second quarter. Total net revenue of the first 6 months in 2023 reached 15,097 billion VND, down 31 % compared to the first 6 months in 2022. Similarly, the gross profit index showed negative signals when it reached VND 480 billion in 6 months and decreased by 25% over the same period.
Although the revenue in the second quarter was a step down compared to last year, there were still some bright spots in the company's business. Financial revenue in this period increased by 15% compared to last year. Besides, financial and selling expenses were also reduced by 11% and 55%, respectively, compared to the previous quarter.
Efforts to cut costs and boost financial activities have not been enough to improve business results. VNSteel's profit after tax in the second quarter of 2023 lost 284 billion and fell sharply by 57% compared to the second quarter of 2022. This result surprised many investors when just 3 weeks ago VNSteel had reported a pre-tax profit of the holding company of more than 133 billion dongs.
Steel price fluctuations are the direct cause of VNSteel's difficulties
VNSteel evaluates that the domestic steel market has many challenges. Although the worst time has passed, the domestic demand is gloomy, and the export situation has not made many strong impressions, which has affected the Vietnamese steel enterprises.
Since the beginning of the year, the domestic market has experienced 19 corrections in construction steel prices. Specifically, in the first quarter, there were price increases, but from the beginning of the second quarter onwards, the price of construction steel has adjusted 13 consecutive declines. The average price of all steel products in the past 6 months fell sharply from 13.9 to 37% over the same period.
Steel consumption is also not very optimistic when finished steel decreased by 30% over the same period, long-rolled steel decreased by 33%, and cold-rolled coil decreased by 24%. In the first 6 months of the year, total sales volume only achieved 38% of the previous strategy. The weak domestic demand and the international steel demand have uncertainties leading to the narrowing of export scope.
Outlook for steel industry recovery from the government's supportive policies
Although the steel market is still facing many difficulties; However, the period from now to the end of the year is predicted to have many outstanding highlights from the government's supportive policies in the real estate and construction sectors.
The National Assembly has approved an economic recovery support package worth 355,000 billion VND, of which nearly 50% of the package value will be spent on infrastructure development such as Long Thanh airport, North–South Expressway East, and logistics ports,... The promoting constructive stages is expected to increase the steel consumption demand.
In addition, the government approved the project ‘Investing in building at least 1 million social housing apartments’ earlier this year. The implementation of housing construction projects is considered a breakthrough to help revive domestic steel enterprises to solve the problems in consumption demand.
It can be seen that the current situation of the steel market is still under pressure, but with a series of economic stimulus policies of the government, the domestic steel industry is expected to prosper gradually in the near future.