Tisco's profit has plummeted due to high capital costs

DNHN - Consuming up to 3,143 billion dongs, the rate of increase in COGS was greater than the selling price, so Thai Nguyen Iron and Steel Joint Stock Company (Tiscogross )'s profit fell by nearly 90 per cent to only nearly 47 billion dongs.

Thai Nguyen Iron and Steel Joint Stock Company (Tisco, UPCoM: TIS) reported consolidated financial results for the second quarter of 2022, with net revenue falling slightly to VND3,189 billion. 

However, when consuming up to 3,143 billion VND, the COGS growth rate outpaced the selling price, resulting in a nearly 90 per cent drop in gross profit to only 47 billion VND. 

Tisco only had to spend 35 billion dongs on financial expenses during this period, a 65 per cent decrease from the previous period. At the same time, nearly 11 billion dongs in management expenses were refunded, whereas this item cost 275 billion dongs during the same period. 

Tisco continued to lose more than 8.5 billion dongs from other activities, exceeding the previous year's loss of nearly 2 billion. Tisco reported a net profit of nearly 6 billion dongs after deducting other expenses, a decrease of 90 per cent over the same period. 

Tisco's net revenue is VND 6,923 billion after 6 months, up nearly 6% from the same period last year. Despite this, profit after tax fell by 66 per cent to nearly 35 billion dongs. 

Meanwhile, Tisco expects total revenue of VND 20,105 billion and a pre-tax profit of VND 110 billion in 2022. As a result, Tisco is still well short of the year-end target. 

Tisco's total assets increased by 528 billion VND to 10,855 billion VND as of June 30, 2022. Inventories rose sharply to VND 2,048 billion, while cash fell slightly to VND 222 billion. Long-term unfinished construction costs remained unchanged at VND 6,192 billion. This is an investment in the Phase 2 Iron and Steel renovation project, with a capitalized interest rate of VND 2,951 billion, with the capitalized interest expense being the main expense incurred in the first six months of 2022. 

Tisco is borrowing more than VND 4,519 billion in financial debt in its debt structure. A negative exchange rate difference of more than 180 billion dongs must be recorded by the company. 

Tisco's net cash flow from operating activities was nearly VND 173 billion negative due to the impact of payables. Tisco has a charter capital of VND 1,840 billion, of which Vietnam Steel Corporation contributes VND 1,196 billion (65%), Thai Hung Trading Joint Stock Company contributes VND 368 billion (20%), and the remaining shareholders contribute VND 368 billion (20%).

PV