Pomina Steel swims against the stream

Nearly VND 2,200 billion in net revenue was recorded by Pomina Steel Joint Stock Company (POM), a decline of 73% compared to the same time in 2022. The company lost VND 32 billion on the top line, but made VND 348 billion in net income. 

Interest expenses also rose sharply, by 40%, adding further strain on the company's finances. This resulted in a net loss of VND 504 billion in the first half of the year, compared to a loss of VND 23 billion during the same period last year.

The steel sector as a whole is struggling, with companies like Pomina Steel recording falling performance and huge losses. 

The Vietnam Steel Association (VSA) has reported sluggish steel demand in most locations and negative mood has damaged the selling price of finished steel products. 

Chinese steel companies are trying to increase exports by cutting prices swiftly in order to remain competitive, adding to the worldwide trend of declining steel prices. 

Prices for steel have hit a three-year low, and experts predict it will be some time before the sector is back on its feet.

Pomina Steel once held a larger part of the Vietnamese construction steel market than does Hoa Phat Group. 

The company's aim was to focus on the major construction steel segment and the key southern market. However, Pomina Steel lost market share to domestic competitors because of low sales income in a challenging economic backdrop and expensive capital costs. 

When compared to the profit of almost VND 182 billion over the same time in 2022, the net loss of VND 1,078 billion was the result of operating below cost and pressure on borrowing payments. Pomina Steel forecasted revenues of VND 9,000 billion for 2023, but actually lost VND 150 billion (after taxes).

Pomina Steel continues to hope that the steel industry's revival would bring about a change for the better. Sales volume, notably through export channels, has strengthened, leading the company to think that public investment will sustain domestic iron and steel consumption in the second half of this year. 

Steel consumption is predicted to increase, so in the third quarter of 2022, Pomina Steel will reopen the shuttered blast furnace. 

The company has four plans for electric furnace billet (EAF) operating capacity in 2023, ranging from 40,000 to 60,000 tons/month.

In the opinion of industry professionals, if the company can weather the storm, it will have the chance to reorganize its management, markets, products, and growth momentum utilizing already established cutting-edge technology infrastructures.