Steel businesses race to report losses, thousands of billion dong “cover mats” in the warehouse

The goods could not be sold, the inventory piled up, causing the steel industry enterprises to suffer heavy losses, the debt increased sharply. Many businesses had to stop production and terminate contracts with workers.

Heavy loss

Thu Duc Steel Joint Stock Company – VNSteel (stock code TDS) suffered heavy losses in the third quarter of 2022. Specifically, Thu Duc Steel – VNSteel recorded a net revenue of more than 410 billion dong, but interest expense increased four times over the same period, so it suffered a loss after tax of nearly 22 billion dong, much higher than the loss of more than 640 million dong in the same period. period of the previous year. This is also the most losing quarter of Thu Duc Steel – VNSteel since the equitization in 2008.

In the first 9 months of the year, Thu Duc Steel’s net revenue reached more than VND 1,500 billion (down 8.3% over the same period), a net loss of nearly VND 16 billion. In 2022, this enterprise sets a profit before tax of more than 24 billion dong.

Similarly, in the period from July to September 2022, Vicasa Steel Joint Stock Company – Vnsteel (stock code (VCA) achieved revenue of more than 477 billion dong (down 17% over the same period) plus other losses. nearly 700 million dong, Vicasa Steel – Vnsteel reported a pre-tax loss of nearly 24 billion dong and a loss after tax of nearly 22 billion dong, while in the same period the profit after tax was nearly 2 billion dong, this is also a record quarterly loss of Steel. Vicasa – Vnsteel since its listing on the stock exchange in 2010.

By the end of September, the equity of Vicasa Steel – Vnsteel decreased by 25% to 178 billion dong. At the beginning of the year, the accumulated undistributed after-tax profit was 53 billion dong, but on September 30, it turned negative more than 9 billion dong.

In the third quarter of this year, Thai Nguyen Iron and Steel Joint Stock Company (TISCO, stock code TIS) recorded a net revenue of more than VND 2,600 billion and a loss after tax of more than VND 25 billion, while in the same period the profit after tax was VND 10 billion. Excluding other income, this company has lost more than 38 billion dong from steel business.

Tien Len Steel Group Joint Stock Company (stock code TLH) recorded net revenue of more than 1,100 billion dong, up 27% over the same period. However, gross profit decreased 65% y/y to VND57 billion. If in the same period 100 dong of revenue brought 17.7 dong of gross profit, in the third quarter this figure was only nearly 5 dong.

Inventories of many steel enterprises are increasing sharply.

Factory stops production, workers lose their jobs

Pomina Steel Joint Stock Company (stock code POM) announced to stop blast furnace production (BF) from September 23 and terminate labor contracts with some of the company’s employees. According to Pomina Steel, the company fell into difficulties due to the escalation of goods, especially the price of input materials of the factory, which has increased sharply while the consequences of the COVID-19 epidemic have not been overcome.

Meanwhile, the selling price of steel products and steel billets decreased continuously and the factory had to cope with a crisis in the context of the global economic slowdown. As a result, Pomina Steel had to suspend blast furnace operations, leading to the decision to let some staff members take a break because of stopping the furnace.

Similarly, Southern Steel Company Limited – VNSTEEL on October 25 also sent a notice to its employees about the organization of rotational leave according to the plan to stop production for a long time from October to December 2022. This decision comes from the weakening demand for construction steel in the world and domestic markets, stagnant investment and real estate projects and facing many difficulties.

The common point of steel manufacturing companies at the moment is that inventories increased sharply when the consumption situation was gloomy. At the end of September 2022, Thu Duc Steel – VNSteel still holds more than 420 billion dong of inventory. Tien Len Steel’s inventory stood at VND 3,400 billion at the end of the third quarter of this year, up sharply from VND 2,800 billion at the beginning of the year.

Pomia Steel Joint Stock Company announced to stop producing blast furnaces (BF) from September 23.

Vicasa Steel – Vnsteel holds 377 billion dong of inventory, higher than 350 billion dong at the beginning of the year. The provision for inventory reduction at the end of the third quarter of 2022 is more than 3 billion dong. On the balance sheet, Vicasa Steel has short-term financial loans of more than VND 244 billion, accounting for nearly 50% of total capital at the end of September.

As of September 30, Thai Nguyen Iron and Steel only held 26 billion dong in cash, while inventories increased sharply to more than 2,000 billion dong. With high inventories, gloomy consumption and unrecovered steel prices continue to cause many difficulties for Thai Nguyen Steel.

Short-term debt of Thai Nguyen Steel increased to more than 6,000 billion dong, of which 2,600 billion dong were borrowed and short-term financial lease debt. At the same time, long-term debt was at VND 2,600 billion at the end of the third quarter. This shows that Thai Nguyen Iron and Steel is under great liquidity pressure if the difficult context of the steel industry persists.

According to Duy Quang/Vanguard