The kiln closure is a planned maintenance activity, so production output is likely to increase in the third quarter of 2023 to store finished products for the fourth quarter of this year.
According to a recent strategic report by SSI Research, this unit informed that Hoa Phat Group (stock code: HPG) has reopened the last blast furnace at Dung Quat, with an annual capacity of 1.4 million tons at the beginning. July. However, the company will suspend blast furnace No. 3 at Hai Duong complex – with a capacity of 1.2 million tons/year (14% of total capacity), within 3 months starting from September. Therefore, production output may increase in the third quarter of 2023 to stockpile finished products for the fourth quarter of this year.
The blast furnace shutdown this time is for routine maintenance, different from the blast furnace shutdowns in the past. In November 2022, the leading enterprise in the steel industry stopped operating 4 blast furnaces, including 2 blast furnaces in Dung Quat and 2 blast furnaces in Hai Duong.
The reason for stopping the furnace was given to ensure the group’s production and business activities. Although the market is facing difficulties, inventories are still quite high. At the end of the second quarter of 2022, the company’s inventory skyrocketed to VND57,600 billion. In the third quarter of 2022, Hoa Phat reported a loss of VND 1,800 billion, the largest loss in the entire steel industry.
However, at the beginning of this year, Hoa Phat started to reopen blast furnaces when the management said that the bottom of the steel industry had passed, but according to a certain route, not massively. According to Mr. Nguyen Viet Thang, General Director of the company, the re-run of blast furnaces must be based on the market situation. When consumption is low and raw material prices are still high, it is still necessary to maintain a low inventory of finished products to minimize risks when raw material prices fall.
In the last 2nd quarter, Hoa Phat recorded revenue of 29,800 billion dong, down 21% compared to the same period last year. Profit after tax was VND 1,448 billion, equivalent to a decrease of 64% compared to the same period last year. The positive point is that this profit was 3.78 times higher than the figure of the previous quarter.
Accumulated in the first 6 months, Hoa Phat recorded VND 56,665 billion in revenue and more than VND 1,830 billion in profit after tax, down 30% and 85% respectively compared to the same period last year. Compared to this year’s plan, the company has completed 23% of the profit target.
