In the first eight months of 2022, Vietnam's textile and garment export turnover reached 31.3 billion USD (up 16.4% over the same period), with garment export turnover reaching 24.3 billion USD ( up 24.6% over the same period) and yarn export turnover reached 3.5 billion USD (down 5% over the same period).

According to data from the General Department of Customs, exports to the US reached 12.9 billion USD (up 22.5% over the same period and accounting for 41% of total export turnover).

In August 2022, garment exports reached $3.7 billion (up 53% over the same period). This is a record-high month-to-month result both in growth rate and in absolute terms.

In the third quarter of 2022, some companies (such as TNG and TCM) still receive a large number of orders for delivery for the festive season. In addition, in the third quarter of 2022, the net profit of textile companies based in the South still benefited from the low comparative base in the period of August - October 2021.

Order prospects for the fourth quarter of 2022 and the first six months of 2023 are not very positive, due to concerns about inflation and high inventory levels of customers. In the first half of September 2022, textile and garment exports reached $1.2 billion, down 48% compared to the first half of August 2022, indicating a significant slowdown in orders.

According to updated information of SSI, the number of orders in the fourth quarter of 2022 is 25-50% lower than in the second quarter of 2022 (estimated equivalent to a 15-20% decrease in revenue over the same period), due to high inventories in import markets.

The impact will be more severe for those businesses with customers mainly in the US and EU. Exports to Japan and South Korea also tend to decrease, but to a much lesser extent. TCM has export revenue to Japan and Korea accounting for 40% of total revenue.

TCM and businesses like TCM may record lower revenue declines than companies that are more focused on the US and EU markets like MSH and GIL.

GIL witnessed a serious decline in monthly revenue in the third quarter of 2022 (June 2022 revenue decreased by 60% YoY, July 2022 revenue decreased 83% YoY), due to the The company relies heavily on a large customer.

Many companies have started accepting orders for the first quarter of 2023, but the number of orders received is still far from the operating capacity of these companies.

Meanwhile, most customers are negotiating to reduce orders. Even CMT orders, where customers only pay for labor costs, are currently being squeezed.

According to data from the General Department of Customs, yarn manufacturers saw the average selling price in August decrease by 8% year-on-year. The recent drop in cotton and polyester yarn prices has impacted fabric costs. Companies forecast fabric costs will start to fall in the fourth quarter of 2022 as demand has not yet recovered.

Besides, textile enterprises are affected by the decrease in the USD/VND exchange rate: Although most textile companies record their revenue in USD, many expenses are also calculated in USD such as raw material costs. materials, logistics costs and interest expenses.

Therefore, in the second quarter of 2022, many companies recorded a significant increase in exchange rate losses (realized and unrealized) leading to financial loss when the USD/VND exchange rate fell by 2.0%. in the quarter.

As the sales outlook turns bleak, USD/VND exchange rate is forecasted to continue to decline in the second half of 2022, SSI emphasized that this will continue to negatively affect business results of businesses. especially enterprises with high costs in USD (such as STK, TCM, TNG).

SSI forecasts that orders will continue to be impacted by inflation and recession concerns until the first half of 2023. Orders are expected to improve by the end of the second quarter or second quarter of 2023 if inflation eased.

Although better input material prices will have a positive impact on gross margin, the average selling price is under downward pressure from retailers. As the first half of 2022 is a period of relatively high business results for most of the domestic textile and garment manufacturers, we forecast these businesses will record a decrease in revenue and a net loss in the next 6 months. first month of 2023.

SSI recommends investors reduce the proportion of the textile industry.