Vietnam’s textile giant Vinatex posts 31% profit jump in Q1, braces for potential trade risks

Vietnam National Textile and Garment Group (UPCoM: VGT) reported Q1 profit rising 31% year-on-year, as improved yarn margins and stable garment orders helped offset a volatile global backdrop.

At a meeting last week, Cao Huu Hieu, general director of the state-controlled textile giant, said that consolidated revenue for Q1 this year reached about VND4.55 trillion ($172.88 million), up 2% from a year earlier, while profit climbed 31% to an estimated VND355 billion ($13.48 million).

The firm posts $468 million in export value, up 6.3% year-on-year, with the U.S. remaining its largest market.

Growth was driven primarily by the fiber segment, where profit surged 76% to VND57 billion ($2.16 million), benefiting from a recovery in selling prices and stronger market demand.

The garment division, the group’s core business, posted profit of VND198 billion ($7.52 million), up 4%, supported by favorable order pricing carried over from late 2025 and ongoing market expansion.

Despite Q1 strong performance, Hieu cautioned that Q2 could prove more challenging, citing rising risks from tariffs, geopolitical tensions, and cost pressures across energy and logistics.

Escalating conflict in the Middle East has already disrupted supply chains, increasing freight costs and delivery times, while also affecting consumer demand in key export markets such as the U.S. and Europe.

Adding to the uncertainty, the United States Trade Representative has initiated a probe under Section 301 of the Trade Act of 1974, raising the prospect of additional tariffs on Vietnamese exports. The move could expose the sector to what Vinatex described as a “dual challenge” of higher trade barriers and weaker demand compared with 2025, the executive noted.

Domestically, rising fuel prices are pushing up transportation and manufacturing costs, eroding margins for contract manufacturers that operate on thin spreads.

To mitigate risks in the first half, Vinatex said it is accelerating shipments to the U.S. to take advantage of a temporary window before potential tariff hikes of 10-15% could take effect.

The group is also focusing on shortening production cycles, maximizing the use of solar power to cut energy costs and meet stricter sustainability standards, and tightening cost controls across materials, utilities and subcontracting.

Logistics diversification is another priority, with the company increasing use of intermodal transport routes, including trans-Eurasian rail links to Europe, to reduce reliance on traditional shipping lanes vulnerable to disruption.

VGT shares ended up 1.64% to VND12,400 ($0.47) each on Monday.