Deputy Minister of Industry and Trade Do Thang Hai addresses a conference of the Vietnam Steel Corporation (Photo: VietnamPlus) Hanoi (VNA) – Deputy Minister of Industry and Trade Do Thang Hai has asked the Vietnam Steel Corporation (VNSteel) to provide accurate market evaluations and forecasts to build the production and business plan in an effective manner.
Addressing a conference in Hanoi on January 11 to review the sector’s operation in 2018 and sketch out tasks for 2019, Hai said that ensuring sustainable growth and business efficiency is one of the targets of the sector in 2019.
Many firms suffering from loss
Reviewing the firm’s performance in 2018, Pham Cong Thao, Deputy General Director of VNSteel said that 2018 was a tough year for many steel enterprises.
Sales of cold rolling steel in the year reached only 84 percent of the plan, down 34 percent year-on-year, while that of coated steel sheets were equivalent to 94 percent of the yearly goal and represented a drop of 7 percent. Sales of steel pipe also fell 14 percent year-on-year.
Thao noted that by December 31, 2018, the mother company had invested over 7.53 trillion VND in 38 subsidiaries and partnered companies, along with 380.19 billion VND in five other companies.
Total after-tax of the 38 VNSteel-invested companies in 2018 was 1.21 trillion VND, equivalent to 79 percent of the 2017 figure. Of them, 14 companies completed and exceeded the yearly targets and enjoyed high growth in profit, including VTM, CKLK, and Vinatrans.
However, seven companies failed to fulfil their targets, suffering from low profits; while one subsidiary and eight partnered companies saw losses.
“VNSteel’s profit from investment in 2018 was lower than that in 2017. There were 13 companies with a high profit ratio from 10-46 percent, while six companies enjoyed 3.5-9.9 percent. Meanwhile, ten companies recorded low profit ratio at under 3.5 percent, and nine suffered losses,” noted Thao.
Hoang Ngoc Diep, General Director of the Thai Nguyen Iron and Steel Corporation (TISCO) said that the project to expand the Thai Nguyen Iron and Steel factory (one of two ineffective industry and trade sector projects) in the second phase is facing many difficulties, while the fierce competition in the market has put great pressure on the company in business efficiency.
He stressed the need to speed up the divestment of the project.
Better forecast needed
According to VNSteel, a series of protection policies and the China-US trade war have affected the consumption of the steel sector. Meanwhile, low productivity and outdated technologies are direct reasons behind the difficulties of many steel enterprises.
In that context, along with cutting down costs and improving management capacity, it is necessary to keep a close eye on market development to give proper investment decision.
Dang Huy Hiep, General Director of VNSteel-Ho Chi Minh City Metal Corp., said that in order to cope with unexpected developments of steel prices, the company has focused on market analysing and forecasting.
Together with studying reports from professional organisations, the company has analysed statistics on the import and reserves of enterprises in the sector, thus adjusting purchase plans to suit market development.
“Capacity in analysing and forecasting is significant to minimise risks and maintain proper reserve,” stated Hiep.
Meanwhile, Le Viet, Deputy General Director of Southern Steel Sheet Co. Ltd., underscored the optimising of production stages and diversifying of suppliers, thus reducing the cost of products.
He held that the purchase of material at the right time is a decisive factor of business efficiency, which also helps businesses optimise their spending.
In 2019, VNSteel targets the production of nearly 2.6 tonnes of steel billets and over 3.1 million tonnes of rolled steel, with profit of 68 billion VND.
In order to reach business efficiency, Hai asked VNSteel to make proper evaluation and accurate forecast on the market, thus building production plan in an effective manner.
“If supply exceeds demands, business will not be effective. Therefore, we would be better to produce fewer products, rather than produce large quantities but be unable to sell them,” he explained.
At the event, VNSteel General Director Nguyen Dinh Phuc also asked member companies to strengthen measures to reduce costs and enhance operation efficiency, while speeding up reform to five more resources for major and profitable business areas.
Leaders of the corporation also proposed that the Government and Ministry of Industry and Trade design measures to prevent frauds and unplanned imports of cheap steel from other countries, causing potential losses for domestic firms. –VNA
