Pomina Steel Faces Unprecedented Losses for Third Consecutive Year
Pomina, one of Vietnam's leading steel producers, has experienced another difficult year, marking its third consecutive annual loss. The steelmaker, which operates several plants in the country, reported a net loss of approximately VND 992 billion ($38.74 million) in 2024. This is slightly higher than the previous year’s loss of VND 961 billion, highlighting the ongoing struggles the company faces amid market challenges and internal operational issues.
The loss comes at a time when the steel industry is facing considerable headwinds, including rising costs, fluctuating global demand, and domestic economic pressures. Despite these challenges, Pomina continues to press on with efforts to restructure its business and return to profitability.
Declining Revenue and Rising Costs Lead to Gross Losses
Pomina's revenue in 2024 reached nearly VND 2.33 trillion ($90.92 million), which represents a sharp 29% decline from the previous year. This downturn was mainly driven by reduced exports, which fell by 54%, and a significant drop in demand from international markets. Domestic sales, however, accounted for 78% of the company's revenue, which saw a modest increase of 63 percentage points compared to 2023.
The company's cost of goods sold (COGS) exceeded its revenue, resulting in a gross loss of about VND 80 billion ($3.12 million) — a decline of VND 20 billion compared to the previous year. This discrepancy between costs and revenue further compounded Pomina's financial woes, and it highlights the difficulties the company has faced in controlling operational costs and adapting to market conditions.
Financial Struggles and Accumulated Losses
As of the end of 2024, Pomina reported accumulated losses totaling VND 2.6 trillion ($101.58 million), which is ten times the company’s owner’s equity. This severe financial imbalance is a result of prolonged losses over several years and highlights the urgent need for a strategic overhaul. The company’s factories, though temporarily shut down, continue to incur significant expenses, primarily related to interest payments, which form the largest portion of the ongoing financial burden.
Pomina’s total borrowings and finance lease liabilities amounted to more than VND 6.2 trillion ($242 million) by the end of 2024, accounting for nearly two-thirds of its total liabilities. This high level of debt is a significant concern for the company, as it strains cash flow and increases the pressure to restructure operations.
The Impact of the Blast Furnace Project and Delays
A major contributor to Pomina’s financial difficulties has been the delay of a critical blast furnace project at its steel billet factory located in Ba Ria-Vung Tau. Originally designed to produce one million metric tons of steel per year, the project faced significant setbacks during the COVID-19 pandemic, leading to higher-than-expected losses in machinery, equipment, and labor costs.
Pomina had enlisted Chinese experts to implement the project, but the delays caused by the pandemic exacerbated its financial strain. This project, which was intended to enhance Pomina’s production capabilities, has instead become a liability, contributing to the company's current financial instability.
Efforts to Restructure and Restart Production
In response to the ongoing financial challenges, Pomina has taken several steps to reduce costs and streamline operations. The company has implemented staff cuts and minimized office-related expenses in an attempt to regain financial stability. These efforts have shown some results, with the company reporting a 16% reduction in losses in Q4/2024 compared to the same period in the previous year.
Pomina has also been actively seeking external investment to support its restructuring process and restart its production facilities. In 2024, the company signed a strategic cooperation agreement with Japan’s Nansei Steel Corporation to secure raw materials for its Pomina 2 factory. Additionally, Pomina has entered into a Memorandum of Understanding (MoU) with a major investor to restart the blast furnace project in 2025.
Pomina’s Challenges in the Stock Market
In addition to its operational difficulties, Pomina also faced challenges in the stock market. In May 2024, the company’s shares were delisted from the Ho Chi Minh Stock Exchange after 14 years of trading. The delisting marked a significant blow to the company’s public image and raised concerns about its ability to access capital markets for future funding.
Despite these setbacks, Pomina is continuing efforts to secure investment and restructure its operations in order to recover from its financial losses and re-establish itself as a key player in the Vietnamese steel market.
Key Takeaways:
• Pomina recorded a net loss of nearly VND 992 billion ($38.74 million) in 2024, marking its third consecutive year of losses.
• Revenue for 2024 was down 29% year-on-year, with domestic sales accounting for 78% of the total, while exports fell by 54%.
• The company’s gross loss reached approximately VND 80 billion ($3.12 million), driven by high operational costs.
• Pomina’s accumulated losses totaled VND 2.6 trillion ($101.58 million), significantly surpassing the company’s equity.
• Total borrowings and finance lease liabilities stood at over VND 6.2 trillion ($242 million) by the end of 2024.
• The delay in Pomina’s blast furnace project, initially meant to produce one million metric tons of steel per year, contributed to the company’s financial challenges.
• Pomina is pursuing strategic partnerships and seeking investors to restructure its operations and restart production in 2025.
• The company’s shares were delisted from the Ho Chi Minh Stock Exchange in May 2024, marking a significant setback in its financial strategy.
