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Hoa Phat Group (HPG VN) – Q1 2025 Earnings – Profit Grows on Surging Steel Demand
Summary of Q1 2025 results and outlook of Hoa Phat Group JSC (HPG VN)
- Vietnam steel market posted double-digit growth in Q1/2025, defying global trade turbulence. Total steel consumption rose 12.2% y/y to 7.5mn tons on the back of robust domestic demand —supported by accelerating public investment and a gradual recovery in the real estate sector—while exports declined sharply amid global market volatility and a shift in producer focus toward the local market. Additionally, the implementation of anti-dumping (AD) measures on Chinese hot-rolled coil (HRC) from March 8 2025 triggered a notable change in sourcing patterns, prompting a pivot toward domestic supply and driving a surge in sales of locally produced HRC.
- HPG’s net revenue rose 21.9% y/y in Q1/2025, driven by strong domestic demand and market share gains. The steel segment, accounting for 94.2% of total sales, recorded a 28.1% y/y increase in volume to 2.7mn tons, led by a 33.3% surge in construction steel and billet sales, pushing up HPG’s market share. HRC sales also grew 23.4% y/y, supported by new capacity from the DQSC2 plant, which was fully ramped up upon commissioning in March. Gross margin improved to 14.4%, up from 13.5% in Q1/2024, aided by higher production utilization and limited adjustments to selling prices despite sharply lower input costs. Net financial expenses rose 72.5% y/y, primarily due to reduced short-term investments as funds were allocated toward the DQSC2. These dynamics contributed to a 16.8% y/y increase in net profit to VND3tn.
- Investment in a new high-quality steel casting and rolling plant marks a strategic step in broadening HPG’s product portfolio and moving up the value chain. Announced at the AGM, the project carries a total investment of VND0tn and is designed with an annual capacity of 0.5mn tons. It aims to supply key infrastructure projects such as railway developments and broaden the company’s reach into other high-grade steel segments. By ramping up the production of engineering and premium-quality steel, HPG seeks to reduce Vietnam reliance on imports and establish itself as a regional leader in high-specification steel products.
- We expect strong volume growth and continued margin expansion in the coming quarters, driven by sustained momentum in the domestic market. HRC sales will be supported by the significant addition of new capacity, benefiting from a structurally undersupplied domestic market that is now further protected by AD duties on Chinese imports. Construction steel is also anticipated to maintain robust growth, underpinned by the government’s ongoing infrastructure push and improving activity in both industrial and residential real estate. Profit margins are projected to improve further as the full impact of AD measures takes effect in the next quarters.
Read our previous analysis on HPG’s quarterly earnings.
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Featured image credit: https://www.hoaphat.com.vn/
