The profits of Vietnamese textile and garment enterprises were diverse in the fourth quarter, with many big names posting great losses.
After being heavily impacted by the COVID-19 pandemic, textile and garment enterprises have gradually recovered and were one of the key export industries that recorded extraordinary growth rates in the first months of 2022.
Data from the General Department of Customs showed that the export value of the textiles and garments sector in 2022 reached $37.57 billion, a gain of 14.7% year-on-year.
The US is the biggest import market of Vietnamese textiles and garments, worth $17.36 billion last year, up 7.9%. It was followed by the Europe Union and Japanese markets, reaching $4.46 billion and $4.07 billion, up 34.7% and 25.8%, respectively.
Although the industry saw positive export prospects in the first and second quarters of 2022, it began to face many difficulties in the last two quarters of the year as global demand for textiles and garments declined.
The export value peaked in August 2022
The sharp decline in orders since September was attributed to a reversal of the trend, causing the industry's export value to fall to 2022's lowest level in the last quarter.
Vietnamese textile and garment enterprises' profits diverged in the fourth quarter after achieving impressive growth in the year's first quarter.
Vinatex surprised the market with a loss of $5 billion. Its profit after tax reached $450 billion in the same period last year, which was the most profitable enterprise in the textile group. This is also the first quarter that Vinatex has recorded a loss.
Vinatex said that due to the influence of China's zero-COVID policy, demand in some markets decreased at the end of the year, affecting the consumption situation and the prices of yarn inventory.
However, for the whole of 2022, Vinatex still made a profit of more than VND 1 trillion, down 20% year-on-year thanks to the large profit in the year's first half.
Similarly, Garmex Saigon Corporation also suffered a loss of approximately VND 59 billion in the fourth quarter, while it posted a profit of nearly VND 35 billion in 2021.
The company said it had to stop production at some factories from mid-August to improve the quality, so most of the finished goods had to be kept in storage while the inventory had not been consumed. Garmex Saigon only reported a profit in the second quarter and lost all three remaining quarters last year, leading to a net loss of nearly VND 66 billion in 2022, marking its first yearly loss since listing.
Other well-known enterprises in the industry, such as Song Hong Garment, Century Synthetic Fiber Corporation, and Everpia, experienced bad results, with their profits decreasing about 40-50% over 2021 to VND 55 billion, VND 43 billion and VND 27 billion, respectively.
On the contrary, some leading companies recorded positive growth of up to two or even three digits.
Thanh Cong Textile Garment Investment Trading's profit after tax surged 140% on-year to VND 60 billion in the fourth quarter. For 2022, it recorded an increase of 95% in profit to VND 281 billion.
Phong Phu Corporation was the most profitable enterprise in the absolute figure. Its after-tax profit reached VND 99 billion, 125% up year-on-year. It reported a record profit since its operation of VND 486 billion last year, up 42% over the same period.
Thanks to effective free trade agreements and increasing compliance with the rules of origin to enjoy preferential tariffs as committed at the FTAs, the export results of textiles and garments increased in 2022.
However, the Vietnamese textile and garment industry still faces many difficulties and challenges when it is heavily affected by input costs, labor costs, and potential economic recession. The current slowdown of global economies has lowered demand in the domestic market and major importing countries including the US, Japan, and the Republic of Korea.
In a recent report, KIS Securities said that 2023 would be a challenging year for the textile industry due to the low demand for apparel products. According to the Vietnam Textile and Apparel Association (VITAS), pre-orders for the first quarter of 2023 fell by 25-27% year-on-year, signaling a difficult year ahead./
TEXTILE AND GARMENT & FOOTWEAR INDUSTRY REPORT - DECEMBER 2022