Vinatex predicts 50% drop in profit before tax this year

Wednesday, Jun 24, 2020 08:49

Production at the Dong Xuan Knitting Company, a Vinatex member. Vinatex's consolidated revenue this year is estimated at VND14.64 trillion. — Photo

Viet Nam National Textile and Garment Group (Vinatex), stock code VGT, predicts its consolidated profit before tax this year to fall by half to VND382 billion (US$16.5 million) year on year due to the negative impacts of the COVID-19 pandemic.

This is the lowest consolidated profit before tax over the past four years, according to Vinatex.

Its business reports for its annual general meeting of shareholders this year have also revealed that its consolidated revenue is estimated at VND14.64 trillion, down 27 per cent compared to last year.

Vinatex said the reductions were due to the impact of the COVID-19 pandemic on its member companies' production and business.

In the report, Vinatex has targeted this year’s revenue of the parent company at about VND1.33 trillion, down by 5 per cent and profit before tax at VND130 billion, down by 56 per cent compared to 2019 because of difficulties in production and business during and after the pandemic.

Tran Quang Nghi, chairman of the Vinatex board of directors, said in the 2020-25 period, the group must adjust its development strategy because it faced competition in technology but not in price 10 years ago.

In its development plan for this period, Vinatex would promote mergers and acquisitions, and restructure its businesses because the group's current business and production model will become inefficient.

Accordingly, the group would renew management and business models, as well as technology and products. Besides continuing divestment, it would also buy shares of other companies as well as invest in newly-established enterprises necessary for the development strategy.

Vinatex has also reported that 2019 was a difficult year for the textile industry, especially the yarn production industry, due to the influence of the US-China trade war, leading to reducing market shares in the world, especially China, reported

Its yarn companies faced decreasing profits and even losses due to abnormal fluctuations of cotton and fibre prices on the global market, leading to lower selling prices.

However, the garment enterprises gained good business results to reach their growth targets compared to the previous year.

Therefore, Vinatex’s consolidated revenue in 2019 reached VND20.14 trillion, similar to 2018, fulfilling 91 per cent of the 2019 plan. Its profit before tax was VND765.5 billion, or 91.2 per cent of the yearly plan and up 0.5 per cent over the same period last year.

With these business results, the Board of Directors has submitted to shareholders the cash dividend payment plan at a rate of 5 per cent with a total payment of VND250 billion.

The General Department of Customs said that in the first five months of this year, the domestic textile and garment industry saw a year on year reduction of 13.6 per cent in total export value to $10.56 billion due to the impacts of the pandemic.

However, this export value in May surged by 16 per cent to $1.87 billion against the previous month.

In the first five months, the US remained the largest textile and garment export market of Viet Nam, with an export value of $4.84 billion, down by 14.9 per cent over the same period last year.

Japan was the second largest export market with a value of $1.39 billion, down by 4.1 per cent and the EU ranked third with an export value of $1.26 billion, down by 19 per cent. — VNS

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