Hoa Phat Group breaks ground on high-grade steel and railway track plant

Hoa Phat Group breaks ground on high-grade steel and railway track plant

Vietnamese steelmaker Hoa Phat Group will begin construction of a new factory producing high-quality steel and railway tracks this month as part of its ambition to contribute to national transport projects.

Chairman Tran Dinh Long addresses shareholders at the group’s 2025 AGM. Photo: Hoa Phat Group

At the group’s AGM on April 17, chairman Tran Dinh Long announced that the project, located in Dung Quat 2 Industrial Zone in the central province of Quang Ngai, has a total investment of VND14 trillion ($556 million). The factory will focus on manufacturing steel that has not previously been produced in Vietnam, with an emphasis on high-grade railway rails.

Long expressed strong confidence in the success of the project, affirming Hoa Phat’s commitment to supplying all steel products needed for the country’s infrastructure plans. He also noted the group’s intention to participate in every upcoming railway initiative, as part of a broader strategic vision aligned with Vietnam’s push for improved logistics and connectivity.

The move follows the group’s recent signing of a contract with Primetals Technologies for a high-quality steel casting and rolling line with an annual capacity of 500,000 tonnes. The rolling line is expected to produce its first output by the third quarter of 2026, while the casting system will begin operations by the fourth quarter of the same year. The fully integrated line includes a large-section bloom casting module for producing railway rails, and a beam-blank module for structural steel production of up to 800 mm sections, targeting the domestic construction and engineering sectors.

The macroeconomic landscape is currently favourable for such industrial expansion. As Vietnam intensifies its focus on public investment and infrastructure development, domestic steel manufacturers stand to benefit from growing demand and supportive policy shifts.

The Ministry of Construction is proposing that the government place direct orders with local producers for strategic materials, which could open additional opportunities for firms like Hoa Phat. These developments come at a time when global supply chains remain volatile, making self-reliance in critical materials increasingly important.

Despite investor concerns over international uncertainties and potential protectionist measures, Long remained cautiously optimistic. “We have to be prepared, but we remain committed to long-term goals,” he said.

The chairman also acknowledged that Hoa Phat’s exposure to the US market remains minimal, with exports to the country accounting for only 1 per cent of total international shipments. With a diversified export footprint spanning over 40 countries and territories, including Southeast Asia, Japan, South Korea, Canada, and the EU, Hoa Phat has been able to maintain resilience and reduce reliance on any single market.

Ahead of the AGM, Hoa Phat announced a revision to its 2024 dividend distribution plan. Instead of the previous proposal of 15 per cent in shares and 5 per cent in cash, the group will now pay the entire 20 per cent in shares.

Management cited the need for greater cash flow flexibility amid global economic fluctuations and the possibility of new reciprocal tax regimes. The retained capital will be used to strengthen business operations and investment momentum.

The group targets VND170 trillion (approximately $6.75 billion) in revenue for the year, a 21 per cent increase compared to 2024, and a projected after-tax profit of VND15 trillion (about $595 million), up 24.8 per cent on-year.

In the first quarter of 2025 alone, the group recorded over VND37.9 trillion (around $1.5 billion) in revenue and VND3.3 trillion (roughly $131 million) in after-tax profit, increases of 22 per cent and 16 per cent, respectively, compared to the same period last year.

Export activities accounted for 31 per cent of the company's total revenue, underscoring their continued role in diversifying income sources and contributing to Vietnam’s trade balance.

VIR