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NKG - Another quarterly loss in Q4 2022 as margin compresses - Earnings Flash

- NKG reported Q4 2022 revenue of VND4.3tn (USD182.2mn; -51% YoY & -3% QoQ) and a net loss of VND356bn (USD15.1mn) compared to net profit of VND452bn (USD19.2mn) in Q4 2021. This is NKG’s second consecutive quarterly loss in 2022 following Q3 2022’s net loss of VND419bn (USD17.7mn). We attribute the weak Q4 2022 results to a slowdown in demand in both the domestic and export markets as well as high-cost input hot rolled coil (HRC) inventory.

- NKG incurred a VND149bn (USD6.3mn) loss at the gross profit level in Q4 2022 that resulted from stagnant sales and declining commodity prices. Both input HRC and galvanized steel selling prices experienced a more than 30% correction as of end-2022 following their peaks in April 2022. This market situation caused steelmakers to be trapped with high purchased input costs while subsequent sales were slow, resulting in a strong gross margin contraction throughout H2 2022.

- NKG’s galvanized steel sheet and steel pipe sales volume dropped 45% YoY to 116,400 tonnes in October - November 2022. For 11M 2022, NKG’s galvanized steel sheet and steel pipe sales volume was 660,000 tonnes (-24% YoY).

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