Vinatex pre-tax profit doubles on-year from buoyant yarn business

Earlier investments are paying off, as Vinatex' yarn business is flourishing this year

This was shared by Cao Huu Hieu, general director of leading state-owned textile and garment conglomerate Vinatex in a recent meeting summing up the group’s production and business activities in 2021.

Vinatex’s latest report shows that despite being heavily impacted by COVID-19, the group's revenue surpassed VND16.43 trillion ($714.35 million) in 2021, a 10.7 per cent jump on-year, including VND1.2 trillion in pretax profit, doubling last year’s level, with many business targets even exceeding pre-pandemic levels.

Hieu noted that 2021 was an unprecedented year in the group’s history. Accordingly, after the fourth wave of COVID-19 broke out in the southern region in the middle of the year, Vinatex’s largest member unit, Viet Tien Garment Corporation, had its 34,000 labourers facing work suspension due to closed factories, leading to serious production disruptions.

“Luckily, after the government loosened pandemic prevention measures in October, 90 per cent of our workers at Viet Tien and other member units came back to work, helping to swiftly recover production, resulting in today’s upbeat performance indicators,” said Hieu.

Hieu has attributed the doubling of the group’s profit figure in 2021 to buoyant yarn business in recent years with soaring order intakes and a sharp hike in yarn price.

In the past, the garment business often accounted for about 80 per cent of Vinatex’s profit value, this year the yarn segment contributed over 50 per cent to the total profit; the result came from Vinatex’s well-conceived strategy with sizable investments into this segment five years ago.

Just two months ago, in October, Vinatex Phu Hung JSC has put into operation its second modern fibre factory with a scale of 22,800 yarn spindles.

Earlier, in June Phu Bai Fibre JSC finalised investment in its third fibre factory valued at $22 million which features 32,000 spindles. This is also the first two-storey yarn factory in Vinatex's system, employing cutting-edge technology.

Based on the upbeat results this year, in 2022 Vinatex aims to further enhance competitiveness, particularly strengthening the complete value chain in the group with growth surpassing 8 per cent annually, focusing on improving growth quality through higher added value and better return on revenue ratio.

“Vinatex sets to grow into an 'all-in-one' destination to clients in the fashion industry in the near future. In 2022-2025, our target is to formulate a sizable supply capacity for the shuttle-woven segment, meeting the initial demands of the world’s major supply chains, leveraging the fairly developed local spinning industry. Simultaneously, Vinatex is considering the development of two knitwear centres in Khanh Hoa and Nghe An,” said Hieu.

The motivation behind Vinatex’s proposed investment into two big centres in Nghe An and Khanh Hoa is that the customers have pledged long-term contracts until 2025 with the group.