Multi dimensional picture of textile and garment enterprises

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Digital transformation – optimal choice for Vietnamese garment & textile firmsDigital transformation – optimal choice for Vietnamese garment & textile firms
Textile and garment businesses face difficulties due to lack of domestic supplyTextile and garment businesses face difficulties due to lack of domestic supply
Multi-dimensional picture of textile and garment enterprises

Many textile and garment enterprises proactively invest in equipment to increase productivity

Profits fluctuate

The financial report of Thanh Cong Textile – Investment – Trading Joint Stock Company recorded revenue of more than VND 934 billion in the first quarter 2024, an increase of 7% compared to the same period in 2023; Net profit reached over VND 62 billion, growing by 14%.

According to Thanh Cong Textile – Investment – Trading Joint Stock Company, the company has currently received about 88% of the revenue plan for orders in the second quarter of 2024 and about 83% of the revenue plan for orders in the third quarter of 2024. In 2024, the company sets a revenue target of about VND 3,707 billion, growing 12% compared to 2023 results; The planned profit after tax is VND 161.2 billion, an increase of about 21% compared to the results in 2023. Based on the forecast of Vietnam’s textile and garment export situation in 2024 and the current order situation, this company expects that this year’s export orders will be better and the proposed business plan will be achieved.

Similarly, at Garment 10 Corporation, revenue in the first quarter of 2024 also recorded a growth of 25% compared to the same period in 2023, reaching approximately VND 1,100 billion; Profit after tax reached nearly VND 30 billion, growing by 26%.

However, not all textile and garment enterprises will achieve growth in the first quarter of 2024.

At Century Fiber Joint Stock Company, consolidated revenue in the first quarter of 2024 reached VND 265 billion, down nearly 8% compared to the same period last year. Notably, because financial income in the first quarter of 2023 was quite high, and exchange rate fluctuations in this period caused financial costs to increase sharply, Century Fiber’s profit after tax dropped sharply by over 56% compared to same period in 2023.

In the investor newsletter for the first quarter of 2024, the leadership of Century Fiber said that the market situation showed signs of recovery in the first quarter of 2024 but it happened slowly and the total amount of goods sold was still low. To compensate for the lack of orders, the company had made efforts to attract high value-added orders, although these orders were small in volume, but had better selling prices and profits, for example, recycled fiber orders from Japanese customers. Thanks to that, Century Fiber recorded 8 new customers in the first quarter of 2024.

The leadership of Century Fiber predicted that the number of orders in the second quarter of 2024 would improve compared to the first quarter of 2024 and was estimated to increase by about 10-20% compared to the first quarter of 2024. The reason was that inventory levels of brands were decreasing, and market demand was gradually recovering in the second half of 2024.

Revenue in the first quarter of 2024 of TNG Investment and Trading Joint Stock Company was also only flat compared to the same period in 2024, reaching VND 1,354 billion. After deducting expenses, TNG’s after-tax profit was nearly VND 42 billion, down slightly from the VND 43.6 billion achieved in the first quarter of 2023.

Upswing but still challenging

According to data from the Vietnam Textile and Apparel Association (VITAS), in the first quarter of 2024, Vietnam’s textile and garment export turnover reached about USD 9.5 billion, an increase of 10% over the same period in 2023. In particular, recently released data from the Department of Industry and Trade also showed that the export turnover of textiles and garments through ports in Ho Chi Minh City in the first 4 months of 2024 reached US$ 1.2 billion, growing 40.3% over the same period in 2023.

Explaining this result, Mr. Pham Van Viet, Vice President of Ho Chi Minh City Garment – Embroidery – Knitting Association, said that purchasing power in traditional markets of Vietnam’s textile and garment industry such as the US and EU had increased in the first 4 months of the year. Meanwhile, buyers’ inventories fell below the minimum level, so buyers began importing goods again.

In addition, Vietnamese enterprises have adapted better to the production of small orders and proactively produced some raw materials and accessories for the garment industry that previously had to be imported from China; They also restructured and invested in equipment to increase productivity.

In particular, Mr. Viet said that Vietnamese enterprises were increasingly adapting better to producing products according to trends, helping to increase value. Specifically, Thailand, Korean, and Malaysian enterprises bought Vietnamese brand products to sell in their markets. This confirmed that Vietnam’s design capacity had caught up with market trends and Mr. Viet believed that this form would continue to develop in the coming years.

Although there are many signs of improvement, a VITAS representative said that unpredictable market developments, including many new challenges from “technical barriers” of importing countries, increasingly competition among powerful countries would be the next problem that the textile industry must be ready to cope with.

Currently, the unit price of textiles and garments will still be a big challenge for Vietnam’s textile and garment industry when labour costs in Vietnam are still higher than rival countries such as Bangladesh and India, along with pressure from USD/VND exchange rates. In addition, tensions in the Red Sea cause shipping costs to the US and EU up to double in January 2024 compared to December 2023, which is a notable risk for enterprises with a high proportion of exports to the US and EU.

Consumer trends are also changing, with increasing interest in sustainable and high-tech textile products, such as recycled fibers, biofibers, smart fibers, antibacterial fibers, and fire-resistant fibers. Compared to previous years, consumer demand for these fibers has increased by about 15% to 20%.

Therefore, to increase export turnover, VITAS believed that the main solution was to focus on investing in the development of science, technology and human resources, especially attracting high-tech textile dyeing and finishing projects to the industries; Investing in the production of new materials of natural origin and environmentally friendly; Investing in developing the textile fashion industry.

In addition, the textile industry should continue to diversify markets, products and customers, applying automation technology in some production lines, fast delivery, small product codes and high quality to meet the increasing needs of the market and customers…

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