Hoa Sen Group profits plummet on high interest payments

In the third quarter – the company’s financial year starts in September – it fell to VND82.9 billion ($3.6 million) due to plummeting gross margins caused by high interest and other expenses.

Year-to-date sales grew by 35 percent to VND25.9 trillion ($1.1 billion), but net profit plunged 55 percent to VND512 billion ($22.3 million), according to Viet Capital Securities.

Its debt-to-equity ratio is now three compared the highest rate in the last five years of 2.3, it said. Every day the company’s interest payment is at least VND2 billion ($88,900).

Besides the debt, the profit margin was also hit by higher input and depreciation costs.

But the securities company said sales and top-line growth remain healthy.

Sales of galvanized steel sheets grew by 21 percent in the third quarter and that of steel pipes by 19 percent.

In the year to date, with sales of 976,000 tonnes of sheets and 315,400 tons of pipes the firm maintained 34 percent and 18 percent market shares, respectively, Viet Capital Securities reported.

According to the Ho Chi Minh City Securities Corporation (HSC), corporate governance is a problem for Hoa Sen shortcoming.

On Friday 10 the company’s share closed at VND10,300 ($0.45) on the HCM City stock exchange.