Pomina – The “Apple of the Steel Industry” in Vietnam
In Vietnam, there is a famous steel brand that was established in the 1990s. It uses a logo depicting an apple, and it is called Pomina Steel, which is owned by Pomina Steel Corporation.
According to the company’s interpretation, Pomina Steel uses the image of an apple, which prominently features the seed of the apple, symbolizing the core of life. This meaning reflects the importance and significance of what is represented by this symbol.
The logo of Pomina Steel featuring an apple
Similar to how seeds bring life to all species and how blood brings life to the body, Pomina Steel brings life to everlasting projects throughout time – Pomina Steel has thus become the core of life.
The logo also symbolizes the commitment to quality by the Board of Directors, the Management Board, and all employees of Pomina Steel towards what this image represents. Quality for enduring longevity is the core and purpose of the company.
In addition, the image of the apple is already very familiar to everyone, and when it is attached to a steel strip, it becomes a lovely image that is easily recalled in people’s minds whenever they need to remember a steel brand – the brand of the Apple Steel.
Building a modern factory that was profitable in its first year, and used to be a formidable competitor of Hoa Phat, accounting for nearly 30% of the country’s steel production
In 1999, in the context of rapid industrialization and numerous construction projects that required high-quality steel products, the Board of Directors of Pomina Steel Company decided to invest in the construction of the Pomina 1 Steel Plant, with a capacity of 300,000 tonnes per year, which began production in early 2002. The total investment capital was VND 525 billion.
An image of Pomina Steel production, the company’s website
Pomina 1 Plant is capable of producing all types of construction steel according to Japanese, American, European, Russian standards, etc. and quickly gained a large market share in the segment of the country’s key projects. In addition, the dynamic young employee team was sent to Italy for training, and Italian experts continued to provide training in Vietnam, thereby leveraging their production operation capabilities.
The company’s distribution network extends from the North to the South, managed by Pomina Steel LLC, which quickly made Pomina Steel one of the most familiar steel brands from the first year of production.
From these factors, in the first year alone, the plant was profitable and achieved its design capacity in the second year of the project.
Steel Mill 2 construction began in 2003 and started production in 2005, with a capacity of 300,000 tonnes per year, bringing the total capacity to 600,000 tonnes per year, with a total investment capital of 2 rolling mills of $68 million (equivalent to VND 1.1 trillion).
By the time the information was disclosed on the stock market, Pomina had 1 subsidiary company and 2 dependent Steel Plants, including 5 production lines, including 3 rolling steel lines and 2 steel refining mills. All of Pomina’s technological production lines were designed and manufactured in European countries, and foreign experts provided guidance in installation and operation.
In the period from 2009 to 2010, Pomina was once the largest steel enterprise in Vietnam, accounting for 29.37% of the country’s total production.
A Series of Declining Days
Looking back, there were times when Pomina’s business boomed, with an annual net profit of VND 400-650 billion, such as the periods of 2008-2011 and 2016-2018. However, being an industry with cyclical nature, after the boom period, Pomina’s business results were extremely bleak, incurring heavy losses.
The most recent outstanding performance of Pomina’s business took place in 2021 when the steel industry entered an extremely favorable phase and steel companies reported profits. However, the following year, when the steel industry entered a difficult period, Pomina suffered a record loss of over VND 1,000 billion, due to a sharp decline in steel prices and extremely poor consumption demand. For the apple steel company, the reason also comes from the soaring operating costs of the blast furnace.
Pomina Steel continued its chain of crises with poor business performance in 2023. In Q4/2023, Pomina Steel recorded revenue of VND 333 billion, down 81% compared to the same period, with the parent company’s after-tax profit reorded a loss of VND 313 billion compared to a loss of VND 459.4 billion in the same period.
In the last quarter of 2023, gross profit only generated VND 22 billion, while financial expenses amounted to over VND 180 billion. At the same time, other activities recorded a loss of over VND 148 billion. These are the two main reasons leading to a loss in Q4.
Pomina Steel said that Pomina Steel Plant 3 is still inactive but has to bear multiple costs, including loan interest expenses. In addition, Pomina Steel also stated that the real estate market is still frozen, steel consumption and revenue in the period have declined sharply, while high fixed costs and loan interest have led to large losses in the period.
Accumulated in 2023, Pomina Steel recorded revenue of VND 3,281 billion, down 75% compared to the same period, and after-tax profit of the parent company recorded an additional loss of VND 960 billion compared to a loss of VND 1,166.9 billion in the same period.
As of December 31, 2023, Pomina Steel’s total accumulated loss is VND 1,271 billion, accounting for 45% of the equity capital.
An image of Pomina Steel, the company’s website
In the latest development, Pomina plans to submit to shareholders a comprehensive restructuring plan for Pomina through cooperation with strategic investors (providing capital in cash) to establish a new legal entity called Pomina Phu My Joint Stock Company.
According to POM, the strong restructuring process, especially the participation of strategic investors, marks a significant turning point for the company. This strategic cooperation will provide the necessary capital for POM to restart the blast furnace steel production.
It is expected that POM will restart the blast furnace in Q4/2024 after a period of inactivity to anticipate the recovery of real estate projects expected to be strong in the final months of the year.
At the extraordinary general meeting of shareholders in 2024 on March 1, Pomina Steel will submit to shareholders a plan to increase investment capital for the blast furnace project at the Pomina 3 branch from VND 4,975.2 billion to VND 5,879.7 billion, an increase of over VND 900 billion.
