Thanh Cong Textile-Garment Investment Trading JSC (TCM) has received enough orders for Q1/2024 to operate at full capacity after stagnating for a year, said chairman Tran Nhu Tung.
Tung told investors in a recent meeting that the firm could not operate at full capacity in 2023 due to a lack of orders, and revenues reached just 85% of the year plan.
“However, the situation has improved recently as the company has received about 95% of orders for the first quarter, meaning it can operate at full capacity again,” he noted.
Tung said he believed that 2024 will be better than 2023. "The recovery of the textile industry depends heavily on the U.S, Vietnam's largest export market. The U.S. Federal Reserve has signaled that interest rates have peaked and would soon decrease. When this happens, demand will surge, and textile and garment orders in particular and exports in general will increase again."
However, the TCM chairman emphasized that the industry will continue to face challenges related to sustainable development and ESG (environmental, social and corporate governance) standards. Currently, some countries in Europe such as Germany have applied regulations requiring imported products to meet ESG standards. If Vietnamese businesses cannot meet them, they will find it very difficult to get orders.
10% growth target
TCM was formerly a state enterprise established in 1967 with 500 employees. After equitization, it listed its shares on the Ho Chi Minh Stock Exchange (HoSE) as TCM in 2006. In 2009, the company welcomed a foreign strategic shareholder – E-land Asia Holdings Pte.Ltd Singapore – a subsidiary of South Korea’s E-land Group.
After 57 years, TCM has become one of the few enterprises that have developed a closed chain from yarn to sewing, with revenues of VND3.5-4 trillion ($164 million) per year.
Its products have been exported to more than 20 countries, including the U.S., Japan and South Korea. In 2023, thanks to market diversification, the business's orders did not fall as much as many industry peers.
While the two major markets of Japan and South Korea went almost flat, the main decline came from the U.S. market. Tung expected the U.S. market to stage a good recovery in 2024.
He said TCM will try to find as many orders as possible, not only in the U.S. but also in all other markets that Vietnam has signed a free trade agreement, like Canada and Australia in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) bloc and a number of European signatories to the EU-Vietnam Free Trade Agreement (EVFTA).
In 2023, TCM achieved 85% and 90% of its revenue and profit plan, respectively. However, the company maintained a stable income for employees with a 13th month salary (Lunar New Year holiday bonus) and also handed out performance-based bonuses.
This year, the company's leadership aims for a 10% growth over 2023. "This is a prudent plan that matches the industry's overall growth potential," Tung said.
In the stock market, TCM closed Wednesday at VND40,700 ($1.67) per share.
Vietnam's textile and garment industry faced many difficulties in 2023 due to shrinking orders and falling prices. Many businesses had to lay off employees as they did not have enough orders or had to accept losses to keep workers.
According to the Vietnam Textile and Apparel Association (Vitas), as of mid-December 2023, the country’s textile and garment export turnover had reached about $40.3 billion, 10% lower than 2022. However, the industry saw signs of recovery in the last months of the year.
Vitas has set an export turnover target of $44 billion for 2024, approaching the record level reached in 2022.