Tien Len Steel (TLH) has a record loss in the past 8 years.

Tien Len Steel (TLH) has a record loss in the past 8 years.

Tien Len Steel Group Corporation (Code: TLH), a famous unit in the field of trading construction materials and steel products, has just experienced a record loss quarter, the deepest loss in the past 8 years of this unit.

Specifically, in the second quarter of 2024, Tien Len Steel recorded revenue of VND 1,633.7 billion, an increase of 32.5% over the same period. However, the business situation below cost price caused the company to have a gross loss of VND 66.4 billion while in the same period, the gross profit was VND 37.8 billion.

Financial revenue during the period was only VND9.9 billion while financial expenses doubled to VND53.1 billion. Interest expense accounted for VND27.8 billion in financial expenses.

Operating below cost price, Tien Len Steel suffered a record loss of 153 billion VND, the highest in the past 8 years (Photo TL)

In addition, investment activities in associated companies, which recorded a profit of VND318 million last year, suddenly reported a loss of VND17.4 billion. The company also had to bear increased sales costs and business management costs, accounting for VND14.1 billion and VND13.8 billion, respectively.

The company recorded a negative corporate income tax expense of VND1.2 billion. After deducting other expenses and taxes, Tien Len Steel had a loss after tax of VND153.2 billion, while it still made a profit of VND5 billion in the same period. The parent company's shareholders alone lost VND149.9 billion of this amount.

Q2/2024 can be considered the highest loss quarter of Tien Len Steel since Q4/2015, equivalent to the past 8 years.

Explaining the decline in business in the second quarter of 2024, Tien Len Steel said that revenue increased compared to the same period due to increased consumption output. However, due to having to set aside provisions for goods, gross profit decreased sharply.

At the end of the first 6 months of 2024, Tien Len Steel recorded accumulated revenue of VND 2,895.1 billion, an increase of 8.7% over the same period. At the same time, the company suffered a loss after tax of VND 152.2 billion while in the same period, it made a profit of VND 11.3 billion. With this result, Tien Len Steel has fallen behind schedule and is still far from the profit plan of VND 100 billion set at the beginning of 2024.

Inventories rise, cash falls by more than half

Not only are the business results losing money, but Tien Len Steel's asset structure is also showing many notable problems.

At the end of the second quarter of 2024, the company's total assets reached VND 4,193.6 billion, unchanged from the beginning of the year. Of which, short-term assets accounted for VND 3,635.3 billion, equivalent to 86.7% of total assets.

Specifically, the company's cash reserves are only 114.9 billion VND, down more than half compared to the beginning of the year. Deposits account for about 22 billion VND. Cash reserves are too low compared to the current asset size of nearly 4,200 billion VND.

In addition, the company recorded an increase in receivables to VND824.3 billion. Inventory also increased from VND2,413.4 billion to VND2,567.7 billion, which is also affecting the flexibility of assets. Especially when Tien Len Steel is in a situation of doing business below cost price, the more it sells, the more it loses.

The amount of short-term assets, mostly inventories, is overwhelmingly high compared to the company's long-term assets. Total long-term assets account for only 558.3 ​​billion VND. Of which, fixed assets including factories and equipment account for only 340.4 billion VND. In addition, TLH is also investing 186.1 billion VND in long-term finance in joint ventures and associates.

Regarding capital structure, liabilities are also overwhelming equity, accounting for VND2,488.5 billion. Meanwhile, short-term debt accounts for VND1,527.1 billion, which is almost as high as equity. Most of this is short-term debt of banks.

Revenue is not enough to cover expenses, TLH has negative cash flow of 229.4 billion VND

Poor business performance and record losses also affected Tien Len Steel's cash flow.

In the first half of 2024, Tien Len Steel recorded interest payments of VND48.1 billion, down from the same period last year. The decline in trading securities also caused the company to have a negative VND40.3 billion in operating cash flow.

As a result, Tien Len Steel recorded a negative cash flow from business operations of VND 229.4 billion while in the same period it was still making a profit of VND 141.1 billion.

The lack of business cash flow and insufficient revenue to cover expenses forced Tien Len Steel to increase its debt. According to the financial cash flow, the company borrowed an additional VND 2,409 billion but only paid VND 2,329.3 billion.

Source: https://www.congluan.vn/thep-tien-len-tlh-lo-ky-luc-trong-8-nam-tro-lai-day-post306015.html