Apparel firms scaling down business targets

In the first four months of this year, textile apparel exports were hit by an economic slump and high inflation on a global scale, leading to a 19.3 per cent plunge in value on-year, falling to $9.57 billion.

Export of fabric also took a dive, falling 33.6 per cent on-year to just $1.28 billion.

Textile apparel and spinning firms all face a critical shortage of orders amid hardly predictable market circumstances.

That explains why at their 2023 annual general shareholders meetings in late April, many such firms have set forth business targets much lower compared to 2022 performance.

A major unit under state-owned conglomerate Vietnam National Textile and Garment Group, last year Danang-based Hoa Tho Textile Garment Corporation eyed consolidated revenue touching $223.6 million, up 33 per cent and consolidated profit reaching $14.66 million, up 52 per cent on-year. In which, the consolidated revenue and profit figures of the parent company witnessed a 35 per cent and 79 per cent jump on-year, respectively.

The situation this year, however, presents a stark difference, with a critical shortage of orders.

Hoa Tho Corporation has therefore set forth the consolidated revenue target down nearly $28.26 million and consolidated profit target down $5.97 million in 2023.

Nguyen Van Hai, Hoa Tho Corporation CEO, has attributed the company’s reduced business figures to unpredicted market situation and declining global textile apparel aggregate demand, citing that the current time is unprecedented when the market was dented by diverse bad factors.

Similarly, as rebound signs are yet on the horizon, Phu Bai Spinning JSC, based in the southern province of Thua Thien Hue, has cut its revenue target by over $17.39 million and pre-tax profit more than a half to just $217,390 in 2023.

Last year, though the spinning sector faced more hardships than the apparel sector, Phu Bai still reaped $58.9 million in revenue, up 120 per cent compared to 2021 and took over $488,000 in pre-tax profit.

Last year was a bumper year for Hung Yen Garment Corporation (Hugaco) as the company posted $36.17 million in revenue, equal to 117 per cent of 2021 levels and $5.08 million in pre-tax profit, equal 139 per cent of 2021 levels.

Amid unfavourable market conditions, Hugaco has reduced its revenue target to $32.6 million, down $3.47 million and pretax profit to $3.04 million, down $2.04 million compared to 2022.

Likewise, Viet Tien Garment Corporation has set its revenue target in 2023 equal 95 per cent of 2022, to $349.1 million, and pre-tax profit equal 96 per cent of 2022, at $8.69 million.

The latest report by the General Statistics Office shows that in the first four months of 2023 woven spinning rate shed 4.9 per cent, costume production was cut 7.9 per cent, and casual wear production reduced 10.4 per cent on-year.

Many firms assumed it is rather hard to present remedies in the face of stagnant total aggregate demand, meanwhile the local textile apparel sector is confronting big challenges following China’s reopening with a raft of policy incentives such as lower electricity cost, or delayed tax payment.

Other countries like India, Pakistan or Bangladesh have maintained cheap home currency to stimulate their exports, while the VND has even inched up in the first quarte, and the retail power price has increased by 3 per cent since May 4.

Experts assume that flexible production, small orders and high specification are now smart measures to textile apparel units in the current context.

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