Pomina Steel Joint Stock Company has recently unveiled its Q2 financial statement, revealing a troubling net loss of VND505 billion ($20.22 million) for the first half of 2023. This significant loss has pushed the company’s cumulative losses to VND2,116 billion ($84.7 million), raising concerns about its long-term viability. The financial strain is evident as the company’s owner's equity plummeted from VND1,595 billion at the beginning of the year to VND749 billion ($30 million) by June 30. This decline highlights the severe challenges the company is facing in a competitive and volatile market.
The company’s revenue has continued to decline, failing to cover the costs of goods sold. In Q2, revenue decreased by 23% to VND616 billion ($24.67 million), while the total revenue for the first half fell to VND1,087 billion ($43.53 million). Despite a reduction in financial expenses, which dropped to VND176 billion ($7.05 million) in Q2 and VND321 billion in H1, the figures remain high compared to the company’s revenue. This financial imbalance signals a critical need for strategic adjustments to
Pomina attributes its ongoing business decline to several factors, with the Covid-19 pandemic being a significant contributor. The pandemic coincided with the construction of its blast furnace, delaying the installation process and leading to increased investment costs. Additionally, the Russia-Ukraine conflict and China's stringent zero-Covid policy have further complicated the economic landscape, adversely affecting the Vietnamese economy and freezing the real estate sector, which is crucial for steel demand.
As of June 30, Pomina’s loans totaled VND6,182 billion ($247.55 million), representing 8.2 times its owner's equity. Short-term debt accounted for a substantial portion, reaching VND5,382 billion. The company’s largest creditors include BIDV and VietinBank, with debts of VND1,658 billion and VND2,631 billion, respectively. This heavy debt burden underscores the urgency of the company’s restructuring efforts to stabilize its financial situation.
To navigate these difficulties, Pomina has initiated a comprehensive restructuring plan. However, the process has faced numerous obstacles, including legal regulations and investor hesitance. A notable challenge is the foreign ownership cap of 50%, which has hindered the transfer of shares to foreign investors. This limitation has compelled Pomina to seek partnerships with domestic investors instead. In March, the company convened an extraordinary general meeting to approve a restructuring plan, aiming to sell its Pomina 1 and 3 plants in Ba Ria-Vung Tau to a domestic investor for VND6.7 trillion ($271.7 million). The proceeds from this sale are intended to help settle debts and revive business operations.
As part of its restructuring strategy, Pomina plans to establish a new legal entity, Pomina Phu My Joint Stock Company, with a charter capital of VND2.7-2.8 trillion ($113.6 million). Pomina will contribute its land, workshops, and production lines from the Pomina 1 and 3 plants to secure a 35% stake in the new company, while partners will provide the remaining capital in cash. This move aims to streamline operations and bolster financial stability.
In a positive development, Pomina announced a strategic partnership with Nansei Steel, a major Japanese steel manufacturer, at the end of July. This collaboration is expected to ensure a steady supply of raw materials for Pomina 2, enabling it to operate at maximum capacity starting in September to meet rising market demand. Additionally, the company has signed a memorandum of understanding with another significant investor to resume its blast furnace project in early 2025, anticipating a rebound in public investment and real estate projects in the coming year.
Despite these efforts, Pomina has faced setbacks, including the delisting of its POM shares from the Ho Chi Minh Stock Exchange in April. The shares were moved to the Unlisted Public Companies Market due to delays in submitting audited financial statements for 2023. Furthermore, trading restrictions were imposed, allowing transactions only on Fridays since May 23. As of now, the company has not released its audited financial statements for 2023 or organized its annual general meeting, leaving stakeholders in uncertainty about its future direction.
