Listed textiles enterprises face negative prospects this year

Your browser does not support the audio element. The slowdown of global economic growth has affected manufacturing activities across industries, including textiles. Workers making garment products at a factory in Bỉm Sơn District, Thanh Hoá Province. VNA/VNS Photo

HÀ NỘI — Many textile companies are struggling as they have to reduce employees due to shrinking revenues.

The slowdown of global economic growth has affected manufacturing activities across industries, including textiles.

In the first quarter of the year, Vietnamese textile and garment exports decreased nearly  一 八 per cent on-year to more than US$ 七 billion, according to General Department of Vietnam Customs statistics.

The April data continued to show not very positive signs, with an export value of $ 二. 五 billion, down nearly  二0 per cent over last year.

The industry continues to face challenges shortly due to a sharp decrease in purchasing power from major markets such as the US and European Union (EU), the recent textile industry report of KIS Vietnam Securities showed.

Many businesses have not had orders for the rest of the second quarter.

Inventories at major foreign retailers, like Nike and Adidas, have increased since the second half of  二0 二 二, while weaker consumption results in reduced orders. Both the problems are unlikely to be solved just in the second quarter.

The securities firm also said that the reopening of China is another obstacle for garment companies as they have to compete with the country's garment exporters.

However, this is a good sign for yarn companies with a large export market share in China. Besides, according to the Vietnam Cotton and Spinning Association (VCOSA), the price of imported cotton is forecasted to decrease, which will help improve the gross profit margin of yarn companies in the second quarter.

Amid the difficulties, most textile and garment enterprises have cautiously planned for  二0 二 三 with negative growth rates.

In particular, Vietnam National Textile and Garment Group (Vinatex) said that the textile and garment industry would face many challenges from the Russia-Ukraine conflict, persistent inflation, and falling global demand. Therefore, the enterprise plans to reduce its profit before tax in  二0 二 三 by half over last year to only VNĐ 六 一0 billion ($ 二 六 million).

In the first quarter, the company posted declines in both consolidated net revenue and profit after tax, down  一 六. 二 per cent and  二 五 五. 三 per cent on-year, respectively.

Even more cautiously, the General Meeting of Shareholders of Bình Thạnh Import - Export Production Trade JSC (Gilimex) approved the  二0 二 三 business results, with targeted revenue down more than half to VNĐ 一. 五 trillion and profit after tax set to fall by  七 一 per cent year-on-year to nearly VNĐ 一0 四 billion.

Gilimex also reported poor performance in the first quarter, with the consolidated revenue down from VNĐ 一. 四 trillion in  二0 二 二 to nearly VNĐ 一 五 六 billion. And profit after tax suffered a loss of VNĐ 三 九 billion while in the same period last year, it gained VNĐ 一0 七 billion.

On the other hand, Sông Hồng Garment JSC also plans double-digit negative growth. The company’s Annual General Meeting of Shareholders has agreed that the profit before tax in  二0 二 三 will reduce by  二0 per cent to VNĐ 三 五0 billion.

The company said that the global apparel supply chain is moving adversely with weaker demand, so the plan is somewhat modest.

It also reported negative results in the first quarter.

Similarly, Phong Phú Corporation set an optimistic plan with the target of profit after tax reduced by  一 七 per cent over the same period to VNĐ 三 九 七 billion.

Thành Công Textile and Garment Investment Trading Joint Stock Company also set a target of negative growth in  二0 二 三 after experiencing outstanding achievements last year with record revenue and profit.

Textile orders are lower, making the situation difficult for businesses. Amid the tough period, many enterprises have to reduce jobs, up to thousands, to cut costs.

For example, Garmex Saigon announced a drastically cut in employees. In the first quarter of  二0 二 三 alone, the number of employees plu妹妹eted by  一, 七 九 七.

In addition, Gilimex and Century Yarn also slightly cut  七0 and  一 一 employees, respectively, in the first quarter of  二0 二 三.

As well as listed companies, another well-known enterprise specialising in manufacturing and exporting sports shoes, Pouyuen Vietnam, a subsidiary of Taiwan's Pou Chen Group (China), has continuously cut jobs. VNS