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Textile and garment firms report profits, some all-time highs

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Major textile and garment manufacturers Eclat Textile Co (儒鴻) and Makalot Industrial Co (聚陽) last week posted record profits for the first quarter on higher revenue and improved margins, while down jacket and outdoor garment maker Quang Viet Enterprise Co (廣越) reported a first-quarter profit for the first time, despite it usually being a low season.


Eclat reported net profit of NT$1.79 billion (US$60.25 million) last quarter, up 31.9 percent annually, or earnings per share of NT$6.53, the company said in a regulatory filing on Thursday last week.


The increase was buoyed by higher revenue last quarter, which grew 23.8 percent annually to NT$10.18 billion, while gross margin and operating margin improved annually to 26.8 percent and 21.6 percent respectively, company data showed.


Eclat attributed the strong performance to the effects of deferred orders and price hikes.

The company has seen less pressure from rising raw material costs lately, Eclat vice president Roger Lo (羅仁傑) said at an online investors’ conference in Taipei yesterday.


Coupled with the increases in average selling prices and the depreciation of the New Taiwan dollar against the US dollar, the firm’s gross margin is expected to improve further, he said.


For the time being, inflation and the Russia-Ukraine war have affected consumption in the end-market, Lo said. But Nike Inc, one of its brand customers, has recently revised its forecast for the fourth quarter, indicating that inventories might be well digested, he said.


The firm also counts global brands such as Gap Inc, Target Corp, Lululemon Athletica Inc and Under Armour Inc among its top customers.


Since Western countries, South Korea, Japan and Singapore are all preparing to fully coexist with the virus, the market demand for new clothes will increase once people can go out, Lo said, adding that the company is cautiously optimistic about its business outlook in the second half of the year.


Regarding the progress of capacity expansion in Indonesia, Lo said that the first-phase expansion of the clothing plant in Indonesia currently has a monthly production of 700,000 pieces, and the figure is expected to increase to 1 million pieces by the end of the year, he said.


The second-phase expansion of the plant is expected to be completed in July and August, with the monthly production capacity forecast to reach 500,000 to 600,000 pieces in the first quarter of next year and increase to one million pieces in the second quarter, Lo said.


Eclat plans to start the construction of a fabrics plant in Indonesia next year, he added.


Makalot’s first-quarter net profit increased 37.4 percent from a year earlier to NT$893 million, or earnings per share of NT$3.69, the firm said in a separate filing on Thursday.

Its revenue was NT$7.97 billion last quarter, up 16.9 percent compared with a year earlier, it said.


However, it was robust shipments of high-margin functional clothing, which accounted for 70 percent of its total shipments, that helped boost net profit in the quarter, said Makalot, whose major customers include Gap, Target, Fast Retailing Co’s GU sub-brand, Kohl’s Corp, Walmart Inc and Hanesbrands Inc.


Makalot’s gross margin was 26.1 percent and operating margin was 14 percent last quarter, up 2.5 and 2.3 percentage points respectively from a year earlier, it said.


Meanwhile, Quang Viet reported net profit of NT$10.03 million for last quarter, compared with a net loss of NT$108.99 million in the same period last year.


It was rare for the firm to post profit in the first quarter, as makers of down jackets usually post losses in the January-to-March period due to a surge in expenses. They tend to purchase raw materials from November to March in preparation for the next year of manufacturing.


Quang Viet’s first-quarter earnings per share were NT$0.1, improving from losses per share of NT$1.05 in the same period last year, the company said in a statement.


Due to strong demand from brand customers, first-quarter revenue grew 94.06 percent from a year earlier to NT$3.01 billion, with gross margin of 13.85 percent, the firm said.

Quang Viet said that it has order visibility through to September.


Quang Viet’s customers include Under Armour Inc, New Balance Inc, Mammut Sports Group AG, Helly Hansen Group and Puma AG.

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