Steel giant reports large losses in first half

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The majority of the Vietnam Steel Corporation’s (VNSteel) associate companies have reported losses due to the quiet real estate market and lower market prices.

The information was provided by Vu Ba On, the corporation’s deputy general director, at a press conference in Hanoi on July 10.

Regarding VNSteel’s output in the first six months of this year, On said that the corporation and its members had failed to meet half of their yearly targets.

All the results were much lower compared to the same period last year, excluding rolled steel and pipe production, he added.

In the six-month period, steel production was over 191,800 tonnes, a drop of 30 percent over the corresponding period last year. The market’s total sales were only 11,000 tonnes, a 84 percent year on year decrease against last year.

The corporation, which accounts for 60 percent of the Vietnam Steel Association’s output, estimated that its turnover during this period was 26 trillion VND. Of this amount, the corporation’s turnover alone was 5.9 trillion VND, while its associate companies earned 10.4 trillion VND.

Viet nam Steel giant reports large losses in first halfSteel’s general director Le Phu Hung said that several companies faced losses due to the downturn in the economy.

Seven out of its 13 subsidiaries reported losses in the second quarter while other five associate companies also posted losses.

Hung said the corporation has been operating inefficiently because of increasing financial costs.

“Steel prices fell sharply in the second quarter. In addition, the country has to compete with cheap imported steel from China which is equivalent to our prices for rough steel,” he added.

He said that while the corporation expects to meet its target for the second half of the year, this would be a hard job as steel prices are forecast to keep falling while the Government has not yet introduced any specific measures to support the industry.

He asked all subsidiaries and associate companies to work together and use each other’s products. In addition, they should apply modern technology to save costs.

He said that companies should carefully consider investing in new projects as all their capital comes from loans.

In the near future, the corporation will only focus on the Lao Cai Steel Plant, while supporting the Thai Nguyen Steel Company to get on with its second phase.

A representative from the Ministry of Industry and Trade said the steel market would face further difficulties in the second half of the year.

Steel producers only have the advantage of a lower interest rate.

He said the corporation should enhance its competitiveness by sticking to low prices and high-quality products.

The Finance Ministry will arrange capital for both the above projects which are currently the largest ones in the sector.

Source: VNA

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