Garments and textiles sector cautious for 2023

At several annual general sharerholdes' meetings held by the garments and textiles industry recently, 'prudence' has been the common theme.

Hanoi-based Garment 10 Corporation (Garco 10) has set targets of $182.6 million in total revenue and $4.78 million in pre-tax profit, down $16 million in revenue and $1.73 million in profit on-year.

The dividend ratio for 2023 is set at 15 per cent, compared to 18 per cent last year.

“Our company has had to recalculate our business plan with caution to suit the market situation,” said Than Duc Viet, CEO of Garco 10.

According to the chairman of Vietnam Textile Apparel Association, Vu Duc Giang, "When the market worsens, the cycle usually runs from between 12–14 months, but this time it is likely to last longer, potentially lasting 24 months in the worst-case scenario."

As the market has yet to show signs of rebounding, many operators in the sector are considering such worst-case scenarios, with a possible fall of between 30-40 per cent of order intake.

Danang-based Hoa Tho Textile Garment Corporation hopes to achieve $195.6 million in revenue and $8.68 million pre-tax profit this year, down 12.6 per cent and 41 per cent on-year respectively.

Dap Cau Garment Corporation, based in the northern province of Bac Giang, is no exception to the more cautious outlook running throughout the sector.

According to general director Luong Van Thu, this year Dap Cau envisages just $17.4 million in total revenue and about $695,650 million in pre-tax profit, compared to $23.78 million and $1.06 million last year.

For Vinatex, this year the group aims to post similar revenues compared to last year of around $847.8 million, but its pre-tax profit is set at just $40.65 million, equal to 85.8 per cent of last year’s total.

During an online conference for the local industrial and trade sectors in mid-April, Lam Dong of the Department of Industry and Trade noted that garments and textiles firms face the most difficulties. Apparel processing firms are experiencing a low intake of orders from Europe and North America.

In the first quarter of this year, silk product exporters experienced a severe material shortage as there was a spike in raw cocoon prices.

In addition, several firms exporting to Central Asian markets have faced difficulties in paying their foreign partners, resulting in a pause in exports to the region.

“China’s reopening serves as a boost for our exports while creating more pressure for Vietnamese goods in the global market,” said Nguyen Cam Trang, deputy general director of the Agency for Foreign Trade under the Ministry of Industry and Trade.

Many forecasts and analyses by domestic and international organisations show that the global demand for garments and textiles would decline by 6-10 per cent in 2023, falling to around $710 billion, maybe as little as $690 billion.

These conditions make Vietnam’s target of $45-46 billion in total export value seem overly optimistic unless the global appetite for textiles and related products suddenly increases.

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