Vietnam textile giants see Q1 profits plunge

Vietnam's textile and garment giants Vinatex, Century Corp, Viet Tien Garment, and Phong Phu Corporation reported a plunge in profits in the first quarter of this year amid declining orders and high material prices.

The country's largest textile and garment maker Vinatex reported an after-tax profit of VND92.6 billion ($3.95 million) in the quarter, down 3.5 times year-on-year.

Its net revenue reached VND4.22 trillion ($179.63 million), down 14%, according to the corporation's consolidated financial statement. Notably, Vinatex's interest expenses increased nearly two-fold to VND102 billion ($4.35 million).

In 2023, Vinatex has set cautious targets with consolidated revenue of VND19.55 trillion ($833.15 million), equal to 2022, and pre-tax profit of VND935 billion ($39.85 million), down 14% year-on-year.

Vinatex is registered on the unlisted public company market UPCoM as VGT, which closed on Thursday at VND11,700 ($0.5).

Century Synthetic Fiber Corporation posted after-tax profit of VND1.6 billion ($68,200), down 47-fold compared to the same period last year.

The company produces high quality drawn textured yarn, and earned a net revenue of VND287.9 billion ($12.27 million), down two times year-on-year.

Century Corp, listed on the Ho Chi Minh Stock Exchange (HoSE) as STK, said that in Q1, revenue and average sales prices were lower than the same period last year due to falling orders. Although financial, sales and management expenses decreased over the same period, profit failed to improve.

By Q4/2023, the company's inventory is expected to be quite high, due to the fact that STK has postponed orders for the fall-winter 2023. In return, STK's leaders said the company will prepare orders for autumn-winter 2024 (expected to start from the end of 2023 to May-June 2024). Accordingly, it is expected that in the fall-winter 2024, the demand for yarn will see a strong recovery.

STK has forecast after-tax profit of more than VND253 billion ($10.78 million) in 2023, up 5% compared to 2022, and revenue of more than VND2.15 trillion ($91.58 million), up 2%.

STK shares finshed at VND28,700 ($1.22) at last Thursday's close.

Viet Tien Garment Corporation (VTEC) posted after-tax profit at VND19.5 billion ($831,000) last year, down 25%, on net revenue of VND1.85 trillion ($79 million), up 22%.

This year, VTEC is aiming for revenue of VND8.03 trillion ($342.2 million), down 5% year-on-year, and pre-tax profit of VND200 billion ($8.5 million), down 4%.

On the UPCoM, the VTEC share price stood at VND35,500 ($1.51) per unit at Thursday's close.

Phong Phu Corporation recored net revenue of VND405 billion ($17.26 million) in 2022, down 9%, and after-tax profit of VND125 billion ($5.33 million), down 22%.

The company, ranked fourth in the market in the field of sewing thread production, has not announced its business targets for 2023.

The Import and Export Report of 2022 compiled by the Ministry of Industry and Trade said that Vietnam's exports of all kinds of fibers in 2022 reached 1.57 million tons, worth about $4.7 billion, down 18.4% in quantity and 16% in value compared to the previous year.

Yarn companies have difficulty in finding and signing new export contracts as there are no new orders from mainland China and customers are looking for lower prices. Other markets like South Korea, Japan, Egypt, Turkey, the Philippines, and Taiwan are still placing orders, but the quantity is low. At the same time, the selling price is on a downward trend and has not shown any signs of recovery.

According to the General Statistics Office, in the first four months of 2023, fiber exports fell compared to the same period in 2022, reaching only $1.28 billion, down 33.6% year-on-year, while textiles and garments dropped 19.3%, hitting approximately $9.6 billion.

The Vietnam Textile and Apparel Association has given two growth scenarios for 2023. The positive scenario is a turnover of $47-48 billion, while the less positive scenario is about $45-46 billion.