|The strong recovery of the yarn market in 2021 helps bring positive results for VGT. Photo: ST|
Businesses in pandemic areas
Thanh Cong Textile – Investment – Trade Joint Stock Company (TCM) is one of the textile and garment enterprises that were severely affected as the entire factory is located in the area of Covid-19 outbreaks in the South.
TCM’s financial statements for the third quarter of 2021 recorded a 20% decrease in revenue compared to the same period in 2020, at VND783 billion. Accordingly, gross profit also decreased by 57%, reaching only VND76 billion.
In addition, TCM’s expenses increased. In which, financial expenses increased by 7%, selling expenses increased by 24%, and administrative expenses increased by 15%. As a result, TCM lost VND2.5 billion in the third quarter of 2021, while the same period last year had a profit of more than VND85 billion.
In previously announced information, TCM said that the company had to implement social distancing from July 15, 2021, so the labor productivity did not meet the plan while the operating costs under the “3 spot” method were high.
The positive point is that now TCM has received orders until the end of 2021 and the first quarter of 2022. In order to produce on-time delivery, the company is trying to promote the construction of Thanh Cong Vinh Long 2 garment factory.
Garmex Saigon Joint Stock Company (GMC) saw losses in the third quarter of 2021 when there were two out of three factories located in pandemic areas in Ho Chi Minh City and Ba Ria – Vung Tau.
Specifically, GMC’s net revenue decreased by 54% in the third quarter of 2021, reaching US$204 billion. The company’s management said that this decrease was due to the strong outbreak of the Covid-19 pandemic and the decrease in orders received from customers. In the third quarter of 2021, Ho Chi Minh City and Ba Ria – Vung Tau applied Directive 16/CT-TTg, so the company’s production and business situation faced many difficulties, causing production revenue and sales revenue to decrease. As a result, GMC had a net loss of VND6.8 billion in the third quarter of 2021.
Breakthrough by maintaining production
In contrast to the above enterprises, many other textile enterprises have factories located outside the pandemic area recorded an impressive breakthrough when production and business activities were not interrupted.
TNG Investment and Trading Joint Stock Company has an operating area in Thai Nguyen province, which is less affected by the Covid-19 pandemic. TNG’s revenue in the third quarter of 2021 reached VND1,710 billion, equivalent to the same period in 2020. However, profit recorded growth of more than 31%, reaching VND85 billion.
According to Mr. Nguyen Van Thoi, Chairman of the Board of Directors of TNG, from the beginning of the year, the company has oriented to focus on exploiting, increasing the proportion of main FOB customers along with customers moving orders from other countries affected by the Covid-19 pandemic to Vietnam, TNG has focused on technical product lines and more advanced product lines.
In addition, the company also thoroughly applied management solutions to increase labor productivity, improve production and business efficiency.
Similarly, Vietnam Textile and Garment Group (VGT) achieved nearly VND4,000 billion in revenue in the third quarter of 2021, up 23% over the same period last year. In addition, cost of goods increased only 17% – lower than the growth rate of revenue, so gross profit in the period increased by more than 87%. As a result, VGT’s pre-tax profit reached VND316 billion, up 121% over the same period last year.
According to Mr. Cao Huu Hieu, General Director of VGT, the profit growth mainly comes from the contribution of the main production and business areas, especially the yarn sector.
After the 2019-2020 period, which was heavily affected by the trade war and pandemic, the yarn market had a strong recovery in 2021. The yarn units in the group all had good business results, significantly contributing to the overall positive results of the group.
In the third quarter of 2021, when the disease broke out strongly in the South, the production and business situation of some garment units in this area had adverse developments. However, currently, the group is still controlling the situation well, there may be difficulties and advantages for each enterprise, but the overall results of the group are still at a good level.
Century Yarn Joint Stock Company (STK) is a special case when the factory is also located in the pandemic area but still maintains a high growth rate. Specifically, STK’s net revenue in the third quarter of 2021 grew by 43%, reaching nearly VND469 billion; profit after tax reached more than VND62 billion, three times higher than the same period in 2020.
Explaining this impressive result, Mr. Dang Trieu Hoa, General Director of STK, said that in the third quarter of 2021, the Covid-19 pandemic affected the company’s machinery and equipment exploitation productivity as well as sales slowed down. However, business results were still better than the same period last year thanks to the flexibility of the company to prioritize production and sale of products with higher added value, helping to achieve higher profit margins and achieving the quarterly plan though the revenue has not reached the target.