Want to be in the loop?
subscribe to
our notification
Business News
LISTED TEXTILES ENTERPRISES FACE NEGATIVE PROSPECTS THIS YEAR
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 18 per cent on-year to more than US$7 billion, according to General Department of Vietnam Customs statistics.
The April data continued to show not very positive signs, with an export value of $2.5 billion, down nearly 20 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 2022, 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 2023 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 2023 by half over last year to only VNĐ610 billion ($26 million).
In the first quarter, the company posted declines in both consolidated net revenue and profit after tax, down 16.2 per cent and 255.3 per cent on-year, respectively.
Even more cautiously, the General Meeting of Shareholders of Bình Thạnh Import - Export Production & Trade JSC (Gilimex) approved the 2023 business results, with targeted revenue down more than half to VNĐ1.5 trillion and profit after tax set to fall by 71 per cent year-on-year to nearly VNĐ104 billion.
Gilimex also reported poor performance in the first quarter, with the consolidated revenue down from VNĐ1.4 trillion in 2022 to nearly VNĐ156 billion. And profit after tax suffered a loss of VNĐ39 billion while in the same period last year, it gained VNĐ107 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 2023 will reduce by 20 per cent to VNĐ350 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 17 per cent over the same period to VNĐ397 billion.
Thành Công Textile and Garment Investment Trading Joint Stock Company also set a target of negative growth in 2023 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 2023 alone, the number of employees plummeted by 1,797.
In addition, Gilimex and Century Yarn also slightly cut 70 and 11 employees, respectively, in the first quarter of 2023.
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.
Source: VNS
Related News
Q1 2024: 51.3 MILLION WORKERS EMPLOYED
51.3 million people in Vietnam aged 15 and above were employed during the first quarter of 2024, an increase of 174,100 compared to 2023, or 0.34 percent. The unemployment rate among the country’s working-age population has fallen by 2.24% compared to the same period last year.
FOUR COMMODITIES POST Q1 EXPORT VALUE OF OVER 5 BILLION USD
The total export turnover of agricultural, forestry, and fisheries products in the first three months of 2024 is estimated to reach 13.53 billion USD, an increase of 21.8% compared to the same period of 2023.
MOIT PROPOSES SCHEME TO BOOST RENEWABLE ENERGY PROCUREMENT
The proposed Direct Power Purchase Agreement (DDPA) mechanism, outlined in the draft decree, targets organisations and individuals consuming electricity from the 22kV power grid or higher, with a monthly consumption averaging 500,000kWh. However, residential households are excluded from direct procurement.
REAL ESTATE BONDS PLACE PRESSURE ON ISSUING FIRMS
The ministry’s recent report underscores concerns within Vietnam’s corporate bond market for 2023 and 2024. It emphasizes the critical need to address hindrances to the real estate sector in line with the objectives provided in Government Resolution No. 33/NQ-CP, which aims to stabilize the industry.
DA NANG CUSTOMS FOCUSES ON DEVELOPING CUSTOMS-BUSINESS PARTNERSHIPS
Da Nang Customs Department issued an action plan for developing customs-business partnership in 2024. One of the new events this year is the workshop on “Settlement reports for enterprises engaged in outsourcing, export production and export processing” held in Da Nang Customs Department on April 16, 2024.
OVERCOMING HURDLES IN SUSTAINABLE INDUSTRIAL AND ECONOMIC ZONE DEVELOPMENT
“The path toward sustainable development for industrial zones (IZs) and economic zones (EZs) continues to encounter significant challenges. A notable concern is the instability and lack of consistency in the institutions and policies governing these zones. This inconsistency has resulted in a void of transformative impetus for socio-economic advancement,” said Dr. Nguyen Quang Tuyen from Hanoi Law University.