Hoa Phat Group posted record profit of VND7 trillion in Q1, paying dividend at 40%

On April 22, 2021, Hoa Phat Group Joint Stock Company (HPG) held the Annual General Meeting of Shareholders in 2021. The meeting approved a business plan of VND120 trillion in revenue and VND18 trillion in after-tax profit. Alone in the first quarter of 2021, Hoa Phat Group has estimated revenue of VND31 trillion, an increase of 60 per cent over the same period lastyear. Its after-tax profit reached VND7 trillion, three times higher than that of the first quarter of 2020. This has been a new record profit in a quarter of Hoa Phat for nearly 30 years.

The highest profit in its history, becoming the 48th steel producer in the world

The meeting was attended by nearly 500 delegates, representing 774 shareholders out of a total of over 62,000 shareholders, holding 2.48 billion shares and accounting for 74.9 per cent of the shares with voting rights.

Hoa Phat's Annual Shareholders Meeting attracted nearly 500 live attendants and 1,000 online followers via Zoom

According to a report of the board of directors, in 2020, the COVID-19 pandemic has been spread all over the world, causing many consequences in terms of employment and economic loss. However, 2020 was the year that recorded many proudest achievements for Hoa Phat Group. Hoa Phat’s ecosystem which is built on the foundation of a closed production chain has shown its strong resilience.

Hoa Phat's after-tax profit in 2020 reached VND13.5 trillion, exceeding 50 per cent of the set plan, representing 78 per cent year-on-year increase and nearly 10 times higher than 2010. Its revenue was over VND91 trillion, increasing 41 per cent compared to 2019 and 6.3 times compared to 2010. This was a record number for a manufacturing company like Hoa Phat, especially in a special year like 2020. With high business results, Hoa Phat contributed VND7.3 trillion to the State Budget equivalent to the province in the Top 40 highest tax payers. Hoa Phat also spent VND32 billion for social and charity activities in 2020.

Iron and steel sector was the group’s core business, continuing to play a leading role and contributing 84 per cent of revenue and 82 per cent of after-tax profit in 2020. Hoa Phat’s construction steel and steel pipes continued to maintain its number 1 position in Vietnam, accounting for market shares of 32.5 per cent and 31.7 per cent respectively. Hot rolled coil (HRC) orders exceeded 300 per cent of Hoa Phat's capacity. From the steel billet refining plant using the electric furnace technology of 300,000 tonnes a year, in the beginning of 2021, Hoa Phat's crude steel production capacity reached over 8 million tonnes a year. With this capacity, Hoa Phat Group took the leading position in crude steel production in Southeast Asia and equivalent to the 48th largest producer of crude steel globally (according to World Steel 2020).

The agriculture sector also made great progress when its growth rate reached 32 per cent and contributed 12 per cent of the group's revenue. In particular, Hoa Phat's agricultural profit was three times higher than that in 2019. Australian beef holds the No. 1 market share in Vietnam while its biosafety pigs and clean chicken eggs are also in the top of the market. The real estate sector completed the after-tax profit target compared to the assigned plan. Its industrial zones have occupancy rates of up to 100 per cent. Hoa Phat was given an approval from the Prime Minister to invest in expanding Pho Noi A Industrial Park and Yen My II Industrial Park.

At the end of 2020 and early 2021, Hoa Phat restructured its organisational model with four sectors including Iron and Steel, Steel Products, Agriculture and Real Estate. The four industrial groups are managed by each independent corporation. However, all fields are developed with high interoperability in the group's product ecosystem.

Profit in Q1 reached a new record of VND7 trillion, triple than the same period last year

At the Annual General Meeting of Shareholders, many important contents were discussed and approved such as business plan 2021, dividend payment plan for 2020 and expected dividend in 2021; Plan to set aside funds in 2021, container production project etc.

At the meeting, shareholders raised opinions to discuss about the group's projects

In 2021, Hoa Phat Group plans a sale volume of 5 million tonnes of steel billets, construction steel, 2.7 million tonnes of hot rolled steel, 920,000 tonnes of steel pipes and over 300,000 tonnes of galvanized steel sheets. Regarding business targets, the meeting approved the plan of VND120 trillion in revenue and VND18 trillion in after-tax profit, representing 31.4 per cent and 33 per cent increases respectively compared to 2020.

Chairman of the Board of Directors, Tran Dinh Long said in the first quarter, Hoa Phat Group had estimated revenue of VND31 trillion, up 60 per cent from the same period last year. After-tax profit reached VND7 trillion, three times higher than that of first quarter of 2020. Of the total above profit, VND6.5 trillion came from the net profit of business activities and VND500 billion from the divestment of the furniture segment.

In the first three months of the year, Hoa Phat Group achieved sales volume of more than 2.16 million tonnes of various types of steel. In which, finished construction steel reached 855,000 tonnes, an increase of more than 17 per cent from the corresponding period last year. The exports of steel billet was over 386,000 tonnes, posting 27 per cent year-on-year increase. HRC products in the period reached 665,000 tonnes, an increase of 75 per cent compared to the fourth quarter of 2020. Thanks to the autonomy of HRC materials, Hoa Phat's steel pipes and galvanized steel pipes also increased sharply over the same period last year. The agricultural and real estate sectors also experienced positive growth.

Recently, the price of main production materials such as iron ore and coal has fluctuated strongly. However, with a solid ecosystem foundation and synchronous solutions, Hoa Phat still achieved very high production and sales volume while profit margin has been kept at a good level. The group has the first large vessel with a deep seaport system. Moreover, the production management level at the enterprise has been increasingly improved and effective, bringing strong competitiveness to the Hoa Phat products in the market.

Responding to shareholders’ questions about the container production project, Mr. Tran Dinh Long said: “There are many favorable factors for Hoa Phat to make containers. Steel accounts for 60 per cent of the container production cost. Meanwhile, Hoa Phat can make special weather-resistant HRC steel. Market demand for container is high, so the group decided to join in the sector. We have numerous advantages. If we meet the target of 500,000 containers, we can also consume a large amount of steel from Dung Quat ”.

The Board of Directors and the Supervisory Board for the term of 2021-2026 introduced, dividend payment for 2020 at 40%

The General Meeting of Shareholders elected members of the Board of Directors and Supervisory Board for the term of 2021-2016, approving the investment of Dung Quat 2 project; the company’s amended charter, operating regulations of the Board of Directors, Supervisory Board and some other important contents.

Shareholders approved all contents of the meeting

The list of Boards of Directors at Hoa Phat Group in the new term has 7 members including: Mr. Tran Dinh Long, Mr. Tran Tuan Duong, Mr. Nguyen Manh Tuan, Mr. Doan Gia Cuong, Mr. Hoang Quang Viet, Mr. Nguyen Ngoc Quang and Mr. Nguyen Viet Thang.

The Supervisory Board for the period 2021-2026 period includes 04 members: Ms. Bui Thi Hai Van, Ms. Ngo Lan Anh, Ms. Le Minh Thuy and Ms. Thai Thi Loc.

Members of the Board of Directors and the Supervisory Board for the 2021-2026 period at Hoa Phat Group Joint Stock Company

HPG shareholders also approved the plan to pay dividends in 2020 at the rate of 40 per cent, of which 5 per cent in cash and 35 per cent in shares. The source of payment is undistributed after-tax profit. The payment time will be in the second or third quarter of 2021. The expected dividend rate in 2021 is 40 per cent. Dividend payment for 2020 and 2021 are expected to increase compared to the report of the Board of Directors.

Hoa Phat Dung Quat 2 Steel Integrated Complex to be implemented from 2022

The current Hoa Phat Dung Quat Steel Integrated Complex (Dung Quat 1) and the Hoa Phat Dung Quat 2 Steel Integrated Complex project (Dung Quat 2) received great attention from shareholders. Dung Quat 1 has been completed and started synchronous testing from January 2021. The millionth tonne of HRC steel was produced a month later. The current factories are running at full designed capacity but have yet to meet market demand.

According to Chairman Tran Dinh Long, the Dung Quat 2 project is part of the 10-year development plan of Hoa Phat and having relatively favorable conditions in this period. Total HRC demand is 12 million tonnes, growing by 10 per cent a year. Hoa Phat and Formosa made about 8 million tonnes. It is the reason that they decided to invest in Dung Quat 2. Currently, Hoa Phat produces 250,000 - 300,000 tonnes of HRC a month. If there is 1 million tonne, they also sell out.

Therefore, the group is speeding up legal procedures and site clearance to deploy the Dung Quat 2 project from the beginning of 2022. The project has an expected capacity of 5.6 million tonnes a year, of which there are 4.6 million tonnes of flat steel (HRC); one million tonne high quality bar and wire rod. The project would be implemented in 36 months from the date of receiving land and construction permit.

With an area of 283.73 ha, Dung Quat 2 is expected to have a total investment of VND85 trillion, of which fixed capital is VND70 trillion and working capital of VND15 trillion. The steel production capacity of Hoa Phat will be 14 million tonnes a year, expected to be in the Top 25 largest steel companies in the world as the project comes into operation.

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