VIS Rating - An Affiliate of Moody's presents our update on the 2024 full-year financial performance of the top 30 listed construction materials companies by revenue.
☑️ The financial performance of our covered construction materials companies improved in 2024, indicated by total revenue and net income growth of 13% and 111% year-over-year (YoY), respectively. The improvement is driven by domestic consumption volume recovery, declining input prices, particularly in the steel segment, and a significant decrease in interest expense. Steel producers led the sector’s rebound, posting a 14% YoY revenue jump and a 123% YoY net income growth. Meanwhile, cement and interior materials (tiles, countertops) companies’ revenue remain stable in 2024.
☑️ Buoyed by strong infrastructure and industrial construction activities, steel producers reported a domestic sales volume increase of 9% YoY in 2024, reversing a 9% decline in the previous year. Prices of major inputs decreased considerably in 2024, such as coking coal (-18.7% YoY), iron ore (-8.7% YoY) and hot rolled coil (-10%YoY). Hence, the average gross margin of steel companies improved to 9.1% (2023: 7.5%), driving strong revenue and profit growth. Regarding the cement and interior materials segments, stable demand and high competition resulted in steady financial performance. VCS, a subsidiary of Phenikaa (A, stable), and VGC, a subsidiary of GEX (A, stable), reported slight declines in revenue by 1% and 3%, respectively.
☑️ The sector’s total debt rose 21% YoY in 2024, mainly driven by long-term debts to fund Capex for HPG’s Dung Quat 2 steel project. However, the sector’s paid interest expense declined by 26% YoY, attributed to a low-interest environment. Despite lower interest payments, construction materials companies’ operating cash flow remained volatile and decreased 57% YoY in 2024, primarily due to increasing balances of inventories and prepayments to suppliers. This volatility was largely driven by major steel companies (HPG, HSG, NKG) significantly building up their inventories in response to declining input prices in Q4/2024.
Financial performance of construction materials companies improved in 2024
Source: VIS Rating
Note: Top 30 listed construction materials companies in terms of revenue
“In the construction materials sector, steel producers reported exuberant operating results while cement and interior materials companies maintained stable revenue and profitability in 2024. Looking ahead, we expect the steel segment to continue achieving a strong financial performance in 2025 as recent issuances of anti-dumping tariffs will support domestic producers. Companies in other segments will also benefit from increasing construction demand for infrastructure and residential projects in 2025.”– Le Viet Cuong – Associate Analyst, VIS Rating.
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