Two FDI giants in the steel industry face financial problems

VCN- In 2019, the losses of Hung Nghiep Formosa Ha Tinh Company were4.2 timesthe losses of the previous year, meanwhile, the losses of PoscoYamoto Vina Steel Joint Stock Company were2.5 times higher than those in 2018. Both major FDI enterprises of the steel industry face difficulties in debt repayment.
Profitable FDI enterprises account for small proportion while many enterprises suffer from large and continuous losses for years Profitable FDI enterprises account for small proportion while many enterprises suffer from large and continuous losses for years
Tax evasion questions raised as 55% of FDI enterprises report losses Tax evasion questions raised as 55% of FDI enterprises report losses
2943-4057-posco
In 2019, PoscoYamoto Vina Steel saw a loss of VND2,780 billion, Formosa Ha Tinh lost VND11,538 billion.

Accumulated losses totaled VND25,388 billion

According to the report onthe analysis results of the 2019 financial statements of foreign direct investment enterprisesof the Ministry of Finance, as of December 31, 2019, the total assets of Hung Nghiep Iron and Steel Co., Ltd. Formosa Ha Tinh was VND286,804 billion, of which short-term assets were VND38,927 billion, inventories were VND26,573 billion, up from VND25,044 billion at the beginning of the period.

Liabilities of Formosa Ha Tinh as of the end of 2019 wereVND185,990 billion, of which short-term debt wasVND64,393 billion, and long-term debt wasVND121,596 billion. By the end of 2019, the accumulated loss wasVND25,388 billion.

However, the report of the Ministry of Finance stated the company's loss in 2019 wasVND11,538 billion, 4.2 times higher than the loss of VND2,727 billion inthe previous year.

Short-term debt exceeding short-term assets wasVND25,466 billion,leading to alow solvency ratio of 0.6, which shows that the company uses short-term capital to invest in long-term assets.

Inventory accounts for a large proportion of short-term assets, along with short-term debt exceeding short-term assets, leading to aratio of 0.19. The ratio of payment is very low, showing that Formosa Ha Tinh is having difficulty in debt repayment.

Revenues fall

For PoscoYamoto Vina Steel Joint Stock Company (Ba Ria - Vung Tau), like Formosa Ha Tinh, payments are all very low, showing that the company is facing difficulties in debt repayment.

As ofDecember 31, 2019, the company's total assets wereVND19,957 billion, of which short-term assets wereVND11,034 billion (inventory wasVND2,245 billion).

Liabilities were VND15,649 billion, ofwhich short-term liabilities were VND15,646 billion. Accumulated losses by the end of 2019 reachedVND8,904 billion.

In 2019, the company reported a loss of VND2,780 billion, higher than the loss of VND1,094 billion inthe previous year.

The report of the Ministry of Finance also shows that short-term debt is higherthan short-term assets, half of long-term assets are financed by short-term liabilities, leading to a low solvency ratio of 0.71. The quick ratio is also low at 0.56, showing that the company is also having difficulties in debt repayment.

According to the Ministry of Finance, the analysis of the financial statements of these enterprises shows that, in 2018 and 2019, the two largest FDI enterprises in the iron, steel and other metal manufacturing industry are Iron and Steel Co., Ltd. Hung Nghiep Formosa Ha Tinh Steel and PoscoYamoto Vina Steel Joint Stock Company have difficulties in finance, the results of production and business activities decline, while the contribution to the budget is very limited.

Revenue from production activities and financial activities of Formosa Ha Tinh in 2019 was VND72,030 billion, up by 11.7% compared to VND64,480 billion in 2018. Also in 2019, the company paid VND51.6 billion to the State budget.

Revenue from production and business activities and financial activities of PoscoYamoto Vina Steel in 2019 was VND10,711 billion, lower than VND12,976 billion in 2018. This enterprise paid VND41 billion to the state budget in 2019

By Hoai Anh/KieuOanh

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