Top Vietnamese garment maker Vinatex's H1 profit rises 14%, weak order visibility clouds outlook

Vietnam National Textile and Garment Group (UPCoM: VGT) reported consolidated profit growth of 14.4% in the first half of 2026, driven by a strong recovery in its yarn business, even as weakening global demand and uncertainty over U.S. trade policy cast a shadow over the sector’s outlook.

The state-controlled textile and apparel group (Vinatex) said first-half consolidated revenue likely rose 6.5% year-on-year to VND9.77 trillion ($371.31 million), equivalent to 46% of its full-year target. Consolidated profit is estimated at VND763 billion ($29 million), completing 55% of the year's plan.

The yarn segment was the key earnings driver, generating estimated profit of VND205 billion ($7.79 million), up sharply from a year earlier and representing 82% of its full-year target. Vinatex said most yarn subsidiaries had secured orders through June, with some extending into July and August.

The company attributed the improvement to tighter raw material management, inventory control, and timely cotton procurement amid volatile input prices.

Garment manufacturing operations also remained stable during the peak season ahead of a key July trade-policy deadline. Several subsidiaries have secured orders through Q3, while some long-term customers have already placed orders for the remainder of 2026.

However, outlook beyond Q3 remains uncertain.

“The pace of orders is slowing as importers wait for the outcome of tariff negotiations and U.S. trade decisions expected on July 24,” said Hoang Manh Cam, chief of Vinatex’s board office.

The uncertainty is already affecting manufacturers. A representative of Hung Yen Garment Corporation, a member unit under Vinatex, said the company faces significant challenges securing orders from September onward.

Global demand weakens

Vinatex said global textile consumption remains under pressure amid sluggish economic growth, geopolitical tensions, and trade policy uncertainty.

Higher energy and logistics costs have also sustained inflationary pressures in major economies, prompting consumers to curb discretionary spending on apparel.

According to data cited by the group, textile and apparel consumption fell 12.1% in the United States during the first four months of 2026, while demand in the European Union declined 12.8% in the first two months of the year. South Korea recorded a 1.8% decline over the January-April period.

The industry is also facing growing pressure from customers demanding smaller order volumes, shorter delivery times, and lower manufacturing costs.

To meet its full-year targets, Vinatex said it will continue adopting flexible operating strategies based on evolving market conditions and international trade policies, particularly developments related to U.S. tariffs after July 24.

For the yarn segment, the company plans to maintain short-cycle raw material purchasing, tightly manage inventories and working capital, and seek ways to reduce energy costs as electricity prices rise.

Garment subsidiaries will focus on improving productivity, expanding satellite manufacturing networks, and pursuing higher value-added orders for Q4.

Beyond short-term challenges, Vinatex is accelerating investments in textile-dyeing capacity, green manufacturing and circular production models. The group views its transition toward a “green, smart, and circular” industrial ecosystem as a key growth driver for the 2026-2030 period.