Textile and garment enterprises suffer heavy losses
Garmex Saigon Joint Stock Company (GMC) - a textile and garment export enterprise in Ho Chi Minh City - has just announced its financial report for the third quarter of 2023. According to the financial report, consolidated revenue in this quarter was only 73 million VND.
Explaining the business results, Ms. Nguyen Minh Hang - General Director of Garmex Saigon - said that the company had no orders, revenue in the third quarter of 2023 came from services.
Despite cutting costs, the company said that increased land rental prices increased costs during the period. Garmex Saigon continued to lose nearly VND11 billion in the third quarter of 2023, approximately the same as last year.
Garmex Saigon's leaders said that the company has rebalanced its personnel, reduced its operations to suit the new situation, and reduced costs to reduce losses.
"The company will continue to save costs, review assets, seek opportunities to reasonably exploit existing premises or liquidate unnecessary assets" - Ms. Hang outlined the roadmap to overcome accumulated losses.
In the first 9 months of 2023, Garmex Saigon recorded revenue of VND8.1 billion, down 97% over the same period. After-tax profit was negative more than VND44 billion, while in the same period, it lost VND6.8 billion.
Along with the business difficulties are staff cuts. As of September 30, 2023, Garmex Saigon had only 37 employees, a decrease of 4 people compared to the end of the second quarter of 2023 but a decrease of more than 1,900 people compared to the end of 2022 and more than 3,700 people compared to the end of 2021.
According to the Ministry of Industry and Trade, textile and garment exports in the first nine months of this year only reached 29.1 billion USD, far from the export plan of 45 - 48 billion USD in 2023 set at the beginning of the year. According to businesses, the difficult situation will continue for many months to come.
Speaking with Lao Dong Newspaper on October 25, General Director of Garment Corporation 10 Than Duc Viet said that the company always balances the main markets of the US, Japan, Europe and other markets such as Korea, China, Canada...
May 10's strength is shirts, but in 2023, this item will suffer the most damage. Previously, shirts accounted for 60% of May 10's output, but now it only accounts for 39%. To stabilize production and business, May 10 must place orders for pants, polo shirts, and T-shirts at the shirt factory.
“In fact, consumer trends and behaviors also affect the market. Because in the US, there is a trend of working from home, not using office fashion products such as shirts when going to work. Some customers shared with May 10 that businesses cut costs from electricity, water, office departments, design work 2 days a week, and IT and accounting come to the company once every 2 weeks. This trend really affects purchasing power, making it difficult to stimulate demand,” said Mr. Than Duc Viet.
What is the solution?
At the conference to discuss production and business orientations for 2024 on October 13, Chairman of the Board of Directors of Vietnam National Textile and Garment Group (Vinatex) Le Tien Truong commented that in the remaining months of 2023 and 2024, enterprises may have to face risks such as political instability, armed conflicts in areas at risk of spreading; signals of sustainable recovery in the US, EU, and Japan are unclear; the time to apply EPR (extended producer responsibility) and CBAM (carbon border adjustment mechanism) is approaching...
“The overall market in 2024 is likely to see improved demand compared to 2023, but the improvement is small. Total demand in 2024 is expected to be 5-7% lower than in 2022; there is a trend of reducing the quantity of goods to gradually prepare for the possibility of applying EPR; unit prices may increase based on reduced quantity and higher requirements for quality and other non-financial standards,” said Mr. Le Tien Truong.
However, the market also shows new opportunities such as shifting yarn sourcing from China, FDI enterprises increasing fabric production in Vietnam from domestic yarn; specialized, high-end products, including high-end raw materials, are forecasted to have growth potential in key markets such as the US, EU, Japan, Korea, China and the domestic market.
Vinatex Chairman asked businesses to make more efforts in the remaining months, building a plan for 2024 with the garment industry increasing revenue by 3-5% and profits by 85-100% compared to 2023.
To do this, businesses and units should approach customers with new, specialized products, improve labor productivity, flexibly arrange production, restructure the production system, limit expansion to restructure production; the fiber industry needs to forecast higher frequencies for units, combine finances, continuously improve quality, strive to create different products, etc.
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