Steel producers report strong growth in profits despite COVID-19 hinh anh 1Hoa Phat Group's workers checking steel inventories. (Photo:
Hanoi (VNS/VNA) - Despite disruptions caused by the fourth wave of the COVID-19 pandemic, steel producers still reported extraordinary profits.

In its third-quarter financial report, Hoa Phat Group (HPG) posted a rise of 56 percent year-on-year in revenue to 38.9 trillion VND (1.7 billion USD), resulting in record profit after tax of 10.35 trillion VND, 2.7 times higher compared to last year.

As of September 30, the leading steel producer recorded revenue of over 105.8 trillion VND, up more than 60 percent. Its profit after tax jumped 200 percent over last year to 27.1 trillion VND, which exceeded 45 percent of the year's plan.

In the past nine months, Hoa Phat produced 6.1 million tonnes of crude steel, up 50 percent over the same period last year. Sales of steel products reached 6.3 million tonnes during the period, up 43 percent. Of which, construction steel sales rose 12 percent to 2.8 million tonnes, while hot rolled coil (HRC) sales reached nearly 2 million tonnes.

Tien Len Steel Group (TLH) also reported outstanding performance last quarter.

Even though the company’s consolidated net revenue increased 1.5 percent year-on-year to nearly 909.4 billion VND, its profit after tax surged more than 8.3 times to 105.5 billion VND.

Tien Len Steel Group said that the rise in revenue was driven by higher steel prices, while low inventories resulted in a sharp drop in the cost of goods sold. During the period, the company also minimised a number of expenses, leading to a sharp gain in net profit.

In the first nine months of 2021, its revenue climbed 15 percent to 3.28 trillion VND, with net profit up to 422.3 billion VND from just nearly 997 million VND in the same period last year. With the result, the company exceeded its whole year target.

This year, Tien Len Steel Group set a target of 250 billion VND in profit after tax.

Similarly, Thai Nguyen Iron and Steel (TIS) and Me Lin Steel (MEL) witnessed strong growth in business results.

Thai Nguyen Iron and Steel said in its third-quarter report that the company’s net revenue jumped 46.5 percent over last year to nearly 3.1 trillion VND, with net profit reaching nearly 10 billion VND, 25 times higher than that of last year.

During the period, its profit from financial activities rose strongly, while interest expenses declined.

In the first nine months, it posted an increase of 37.5 percent year-on-year to over 9.6 trillion VND. Given the sharp fall in expenses and higher steel prices, its profit after tax rose 7 times over last year's to 113 billion VND.

Meanwhile, Me Lin Steel recorded a loss of 18.7 percent in net revenue to 196 billion VND. But thanks to a significant cut in expenses, with financial expenses and general and administrative expenses both down more than half, its profit after tax was still 10.6 times higher than the same period last year to over 18.7 billion VND.

According to Me Lin Steel, in the third quarter, domestic steel prices rose sharply compared to the same period of 2020, while the company's inventories were still relatively low, so profits surged. At the same time, the company also maximised production and business expenses like sales and interest expenses, and increased efficiency.

Le Xuan, a senior trader, said that steel enterprises were likely to benefit as China was tightening its annual steel production output.

“Environmental problems and limited energy consumption are forcing Chinese enterprises to reduce output, causing a fall in the global steel supply, as China is the world's largest steel exporter,” Xuan said.

“It will support our steel producers.”

On the stock market, HPG and TLH are listed on the Ho Chi Minh Stock Exchange (HoSE), while MEL is traded on the Hanoi Stock Exchange (HNX) and TIS is on UPCOM.

These stocks have gained strongly since the beginning of the year with HPG shares and TIS shares up 34 percent and 53.2 percent, respectively. TLH shares even jumped more than 197.3 percent, while MEL shares rose nearly 130 percent.

“Steel stocks may still have room to increase thanks to the expectation of profit growth and public investment is expected to increase sharply post-pandemic,” said Xuan.

She added that the restart of real estate projects also increased demand for steel products./.