Vietnamese textile and garment giants see Q2 profits plunge as orders drop

Vietnam's textile and garment giants Vinatex, Century Corp, Viet Tien Garment, and Phong Phu Corporation reported a plunge in profits in the second 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 VND22 billion ($926,900) in the quarter, down 98% year-on-year.

Its net revenue reached VND3.19 trillion ($134.4 million), down 17%, according to the corporation's consolidated financial statement. Notably, Vinatex's interest expenses increased nearly two-fold to VND102 billion ($4.3 million).

In the first six months of the year, Vinatex posted net revenue of VND8.12 trillion ($342 million) and after-tax profit of VND115 billion ($4.8 million), down 15.5% and 97%, respectively.

Vinatex said that its businesses continued to face a shortage of orders and low unit price due to low demand. Orders were in short supply so employees were short of work, but the corporation still tried to pay their wages. This materially affected the consolidated profit of the company, which has a very large number of employees.

As of June, Vinatex's total assets had stood at nearly VND19.13 trillion ($805.8 million), down 4% compared to the beginning of the year, of which inventories hit VND3.38 trillion ($142.5 million), down 18%.

In 2023, Vinatex has set cautious targets with consolidated revenue of VND19.55 trillion ($823.6 million), equal to 2022, and pre-tax profit of VND935 billion ($39.4 million), down 14% year-on-year.

Vinatex is registered on the unlisted public company market UPCoM as VGT, which closed Tuesday at VND13,400 ($0.56).

Meanwhile, Century Synthetic Fiber Corporation posted after-tax profit of VND37.6 billion ($1.58 million) in Q2, down 54% compared to the same period last year.

The company produces high quality drawn textured yarn, and earned a net revenue of VND407.3 billion ($17.2 million) in the period, down 23% year-on-year.

In the first half of 2023, the company, listed on the Ho Chi Minh Stock Exchange (HoSE) as STK, recorded net revenue of VND695 billion ($29.3 million) and after-tax profit of VND39 billion ($1.6 million), down 40% and down 73% year-on-year, respectively.

At the end of Q2, STK's total assets had reached over VND2.28 trillion ($96.2 million), of which inventories were VND503.6 billion ($21.2 million).

Century Corp has forecast after-tax profit of more than VND253 billion ($10.6 million) in 2023, up 5% compared to 2022, and revenue of more than VND2.15 trillion ($90.6 million), up 2%.

STK shares finished at VND30,950 ($1.3) on Tuesday.

Viet Tien Garment Corporation (VTEC) posted after-tax profit of nearly VND56 billion ($2.4 million) in Q2, up 7%, on net revenue of VND2.27 trillion ($95.6 million), down 4%.

In the first six months of this year, VTEC reported net revenue of VND4.12 trillion ($173.7 million), up 6%, and post-tax profit of VND75.4 billion ($3.2 million), down 3%.

This year, VTEC (VGG) 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%.

As of June 30, VTEC's total assets had reached VND5.11 trillion ($215 million), down 10% compared to the beginning of the year, of which cash and cash equivalents hit VND267 billion ($11.2 million), down 28%.

On the UPCoM, the VGG share price stood at VND35,600 ($1.5) per unit at Tuesday's close.

Phong Phu Corporation recorded net revenue of VND376 billion ($15.8 million) in Q2, down 17%, and after-tax profit of VND87 billion ($3.66 million), down 46%.

In the first half of 2023, the company, listed on the unlisted public company market UPCoM as PPH, posted net revenue of VND781 billion ($32.9 million), down 13%, and after-tax profit of VND212.6 billion ($8.9 million), down 34%.

This year, PPH has set consolidated revenue of VND2.23 trillion ($93.9 million) and consolidated pre-tax profit of VND479.6 billion ($20.2 million).

As of June 30, PPH's total assets had stood at VND3.41 trillion ($143.7 million), up 3% compared to the beginning of the year, of which cash and cash equivalents hit VND47.4 billion ($1.99 million), down 34%.

On the UPCoM, PPH closed at VND26,100 ($1.09) per unit on Tuesday.

According to the Vietnam Textile and Apparel Association (Vitas), in 2023, Vietnam's textile and garment industry will be affected by the economic recession and global political upheaval, causing a decrease in orders from major markets such as the U.S. and EU.

Specifically, textile and garment export turnover in the first six months of 2023 was estimated at $18.6 billion, down 17.6% compared to the same period in 2022. Import turnover was estimated at $10.7 billion, down 20.5%, resulting in a trade surplus of $7.9 billion, while in the same period of 2022, it was $8.8 billion.

The State Bank has reduced policy interest rates four times, but due to high deposit interest rates from the end of 2022, loan interest rates remain high. Businesses can hardly access support packages, for example, the package of VND40,000 billion ($1.65 billion) which reduces interest rates by 2%.

Enterprises in the textile and garment industry also face difficulties due to a sharp fall in unit prices by up to 50% compared to normal.

Vitas forecasts that the production and export situation will gradually improve, but difficulties will continue until the end of 2023 as many businesses do not have enough orders for the third and fourth quarters this year.