Businesses overcome difficulties in the context of tariff fluctuations

Photo caption — Expected 17% compound growth in profit, maintaining Top 3 in Vietnam's steel industry. Photo: VNA

The textile and garment sector focuses on negotiating with customers, seeking export markets and new sources of raw materials, optimizing production management, and accelerating production of signed orders in the second quarter of 2025. Meanwhile, VNSteel strives to expand export markets, taking advantage of tax incentives from free trade agreements with the EU to boost steel exports to Europe.

Flexible response, market expansion

Vinatex is entering the sprint phase with a spirit of calm, consensus, sharing and high determination of the entire system. This is the time for each unit, enterprise, each staff member and worker to promote the spirit of solidarity to overcome challenges.

Vinatex Chairman of the Board of Directors, Mr. Le Tien Truong, said that in response to the new tax policy, the Group's businesses quickly updated the production and business situation and feedback from international customers. Previously, when the US announced the new reciprocal tax rate and tax plan on April 3 (Vietnam time), many customers temporarily suspended orders, causing the market and production situation to slow down. However, as soon as the information about the temporary suspension of tax application was announced on April 10, customers accelerated production and delivery progress, requiring orders to be completed within 90 days (before July 5, 2025).

“This is a special period, requiring the entire system to deploy production and business with a sense of urgency but still maintain composure. Along with the 'lightning-fast' production campaign, businesses must focus on understanding the supply chain of raw materials, prioritizing the use of fabric sources from businesses in the system if they meet quality requirements, classifying each item and market at risk of being affected by new tax policies to have a basis for negotiating with customers and finding suitable directions in the coming time,” said Mr. Le Tien Truong.

On the other hand, businesses also set high requirements for transparency in rules of origin, as well as compliance with regulations on anti-commercial fraud; diversifying products, supply chains, and expanding markets to avoid dependence on a few existing markets.

According to Mr. Le Tien Truong, market fluctuations and high tax rates are not new to Vietnam's textile industry. The most important thing right now is not panic or worry, but a spirit of determination, courage, commitment, and readiness to work at the highest efficiency. Shareholders, including SCIC (owning over 90% of Vinatex's capital), have shown a spirit of solidarity with the enterprise during difficult times, accompanying, sharing, and supporting resources and solutions.

Vinatex's total revenue in the first quarter reached VND4,417 billion, up 6.1% over the same period; consolidated profit reached VND271 billion, up 165.5% over the same period in 2024. To achieve this result, in the first 3 months of the year, many enterprises in the fiber industry cut losses and made profits. Along with that, all garment units had good production and business results. In the garment industry, many enterprises have received enough orders until the end of the second quarter of 2025 and are negotiating for the third quarter of 2025. However, in the first quarter of 2025, orders tend to speed up delivery to limit the impact, if any, of the US tariff policy, while orders in the second quarter of 2025 tend to slow down because of waiting for the tax policies of the US President's administration.

Maintain domestic market share, increase pre-tax profit by 100 billion VND

For VNsteel, the comeback in 2024 to escape losses, achieving pre-tax profit of VND357 billion, exceeding the annual plan by 198%, did not necessarily come from market luck. It was the combination of many solutions and strong self-efforts when the domestic steel industry's production capacity was surplus, while exports from neighboring markets increased dramatically.

Therefore, in the difficult situation in the markets, especially when competition protection in the world becomes a widespread trend, the General Meeting of Shareholders (GMS) of VNSteel agreed to adjust the pre-tax profit plan for 2025 by an additional 100 billion VND.

General Director Nghiem Xuan Da said: “Our target for consolidated pre-tax profit this year has increased from VND180 billion to VND280 billion. In the current difficult context, setting such a target shows Vnsteel’s great determination, requiring the joint efforts of shareholders.”

Accordingly, VNSteel will implement a number of key solutions such as: Reviewing units, both subsidiaries and affiliated companies, focusing resources on effective units to increase profits for the entire system; continuing to handle remaining accumulated losses, including putting new factory projects into operation, helping to increase revenue; reducing costs, while improving gross profit margin.

Although the market is currently very difficult, VNSteel has determined to accept the market price mechanism, but also proactively seeks all solutions to increase consumption output. Thanks to that, it is expected that this year's profit will improve. "Everyone can see that the market is difficult. In that context, businesses must still persevere in fighting," said the leader of VNSteel.

In 2024, Vietnam will export about 12 million tons of steel. Of which, the ASEAN market accounts for 26%, the EU market accounts for 22% and the US market accounts for 13%. In the US market alone, Vietnam's steel export output in 2024 will reach about 1.7 million tons, of which corrugated iron products account for more than 700,000 tons, equivalent to about 45%.

With the recent tax adjustments, according to VNSteel, steel exports to the US will certainly be affected. However, there are two major trends to note: First, the export flow will shift to other markets, of which ASEAN is considered a key market. In 2024, Vietnam exported 3.3 million tons to ASEAN and there is still room to continue increasing output; second, businesses will expand exports to new regions such as the Middle East and Africa. "There may be pressure on the domestic market from oversupply, but it will not be as great as initially feared," said a representative of VNSteel.

When new markets have not fully absorbed the output, domestic competitive pressure will increase. VNSteel's strategy is to continue to maintain domestic market share, accept competition; at the same time, proactively implement cost management solutions, increase output to optimize production costs per unit of product. "We continue to expand export markets, take advantage of tax incentives from free trade agreements with the EU to boost steel exports to Europe - a very potential market", said General Director Nghiem Xuan Da.

In fact, SCIC, as a major shareholder of VNSteel, has accompanied the business, especially in terms of senior personnel with rich experience in managing large enterprises and financial management. When the whole economy and the country are implementing the streamlining of the apparatus, aiming at operational efficiency, businesses are not outside this trend.

At VNSteel, the Board of Directors has developed a roadmap to review and reorganize the organizational structure. The orientation is to focus on large units and public companies to consolidate, reduce, and streamline organizational units to meet new development requirements. Personnel adjustments in cumbersome units are mandatory.

For example, at Thai Nguyen Iron and Steel Corporation (TISCO), there are currently about 3,000 employees. VNSteel has proactively implemented streamlining its apparatus for many years, even before the general request from state management agencies. To date, TISCO has reduced its workforce by nearly 2,000 compared to 5 years ago. In the near future, TISCO will continue to review and restructure to further streamline its apparatus and personnel, aiming to achieve two goals: increasing operational efficiency and reducing production costs.

Or at Viet Trung Mineral and Metallurgy Company Limited, one of the 12 loss-making projects of the Industry and Trade sector, VNSteel has set aside all its reserves to deal with the losses that have lasted for 3 years, greatly affecting the consolidated business results of the Corporation. “The goal now is to focus on restoring production and stabilizing the situation. At the end of April, the Company restarted production. This year's plan is expected to reduce losses by about 100 billion VND, contributing to significantly improving the financial results of the Corporation,” said Mr. Nghiem Xuan Da.

Source: https://doanhnghiepvn.vn/doanh-nhan/doanh-nghiep-vuot-kho-trong-boi-canh-bien-dong-thue-quan/20250508070851842