Steelmaker Hoa Sen eyes smallest profit in 10 years
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Steelmaker Hoa Sen Group expects a modest after-tax profit of VND100 billion (US$4.2 million) to VND300 billion this year as a raft of potential pitfalls loom.
Whichever figure it achieves will be the lowest in the last 10 years, mainly due to anticipated export difficulties.
According to the first scenario envisioned by Hoa Sen, the company will post sales of 1.4 million tons of finished products, with revenues of VND34 trillion, and after-tax profits of VND100 billion.
With a more optimistic scenario of selling 1.5 million tons of finished products, the company expects to gain VND36 trillion in revenue and VND300 billion in profit.
In the last 10 years, the lowest profit target the company has ever set is VND400 billion and the highest is VND1.65 trillion.
Hoa Sen’s management said steel exports this year have many potential uncertainties in the context of increasing competition and trade barriers.
Tightened monetary policies and higher lending interest rates as well as foreign exchange rates will also affect the company’s production and business.
Hoa Sen reported after-tax losses of VND680 billion from October to December 2022, the first quarter of this fiscal year.
According to Viet Dragon Securities Corp., having incurred net losses for two consecutive quarters, the steelmaker is experiencing the most difficult period in its history.
Hoa Sen’s difficulties are considered to be twice as bad as its competitors as it operates in both the manufacturing and retail sectors.
Questions & Answers
Q.What are Hoa Sen Group's two profit scenarios for the year?
What are Hoa Sen Group's two profit scenarios for the year?
The company expects VND100 billion profit from 1.4 million tons sold and VND34 trillion revenue. An optimistic scenario projects VND300 billion profit from 1.5 million tons sold and VND36 trillion revenue.
Q.How do this year's expected profits compare to the company's targets over the last decade?
How do this year's expected profits compare to the company's targets over the last decade?
This year's anticipated profit of VND100 billion to VND300 billion is the lowest in the last 10 years. Previous profit targets ranged from VND400 billion to VND1.65 trillion.
Q.What factors are expected to negatively impact Hoa Sen Group's performance this year?
What factors are expected to negatively impact Hoa Sen Group's performance this year?
Management cites increasing competition, trade barriers, tightened monetary policies, higher lending interest rates, and fluctuating foreign exchange rates as key challenges. These are expected to cause export difficulties.
Q.Why are Hoa Sen's difficulties considered worse than those of its competitors?
Why are Hoa Sen's difficulties considered worse than those of its competitors?
Hoa Sen's difficulties are seen as twice as bad as its competitors because the company operates in both the manufacturing and retail sectors. It also reported significant losses recently.
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