SMC gains positive earnings in first quarter

Listed steel maker SMC achieved healthy earning results in the first three months of the year thanks to booming sales of steel and cement.

The steel consumption is expected to rise 9-10 percent to more than 11 million tons this year (Photo:Minh Tri)

At the annual general meeting this year, the steel producer SMC offered shareholders two options of dividend payment. Shareholders can opt for either dividend rates of 10 percent in cash and 20 percent in bonus shares, or 16 percent in cash.

“We should choose the former option, which will help shareholders get paid and the company raise more funds from the bonus share issue,” said a shareholder at the meeting, who asked not to be named.

He also asked the board of directors to raise the share dividend rate to 25 percent or to offer shareholders a bonus share issue with the rate of two-for-one or three-for-one.

Nguyen Ngoc Anh, chairman and general director, said “Additional and convertible share issues will cost us time for registration procedures, while many shareholders do not think that will be a good idea as the stock market remains on a losing streak.”

“Thus we opted for the share dividend rate of 20 percent in order to avoid diluting the share price too much. We also avoid sharing the entire profits as we need money to reinvest and boost the firm’s growth rate this year.” 

SMC always announces the targeted dividend rates to help investors catch up with the flow of the company’s investments, Anh noticed, adding that the firm is not in short of capitals now.

The steel maker, which lists on the Ho Chi Minh Stock Exchange, made a healthy net profit of over VND31 billion (US$1.55 million) from a revenue of VND2.1 trillion in the first quarter of 2011 thanks to a 10 percent increase in the global price.

The inventory of the HCMC-based company reduced to around 30,000 tons of steel in the first three months of the year from 45,000 tons at the end of last year.

“Vietnam’s economy is coping with many challenges this year, including accelerating inflation, high interest rates and strong dollar. However, the steel industry remains potential, with the consumption expected to rise 9-10 percent to more than 11 million tons,” said Anh.

SMC also earned big bucks from cement sales, with 18,000 tons being sold in the first three months of the year. The firm expected that the sales would reach this year’s goal of 180,000 tons.

According to the Vietnam Steel Association, local steel output has reached double the local demand. It expects total production to reach 8.8 million tons this year, up from 7.8 million tons in 2010.

Steel prices in Vietnam are forecast to drop in April and May as consumption is declining due to a reduction in construction projects, the Vietnam Economic Times reported, citing the Vietnam Steel Association. Steel prices have fallen as much as VND400,000 a ton from March 21 at some companies in the south, according to the report.

By Thai Ca and Thao Trinh – Translated by Vu Minh

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