Vinatex is steadfast in the goal of maintaining resources amidst market fluctuations

At the 2024 Annual General Meeting (AGM), Vinatex has developed key solutions and supplemented a number of important contents in the Vinatex restructuring project for the period 2021-2025, with a vision to 2030 to approve. This is considered a clear direction to help Vinatex identify business direction when the mainstream market no longer has much room for development, while steadfastly maintaining resources against market risks.

 2024 Annual General Meeting of Vinatex

Overcoming difficulties, Vinatex completed the 2023 business plan

Mr. Cao Huu Hieu, General Director of Vinatex stated that 2023 was an unprecedentedly difficult year, with textile-garment export turnover decreasing by over 10% for the first time, and business efficiency on revenue being the lowest in the past 10 years. Unit prices of various products dropped by over 20% while input costs surged. In the face of these challenges, implementing the Board of Directors’ strategy, the Group’s Executive Committee has vigorously implemented a number of synchronous solutions: (1) Market research focused on evaluating, selecting customers and developing new customers: member units actively searched for and developed new markets to balance and reduce dependence on mainstream markets; Organizing monthly market workshops and regular seminars of the Yarn and Garment Manufacturing Teams to timely update information on the macroeconomy, textile and garment market, discuss appropriate business plans based on the actual context; (2) Innovating management platforms and digital transformation: Continued development and application of new management solutions to maximize the utilization of human resources across the Group to address issues beyond the capacity of a single enterprise, based on a centralized data platform and operating software systems being built and continuously improved for various fields, e.g. yarn production, finance and accounting, human resources management, etc. (3) Investment and development: Based on the recommendations of the Production and Business Departments and proposals from enterprises, the Group has continuously carried out in-depth investment and upgrading to ensure the automation, optimization to effectively exploit the existing production capacity system, at the same time forming new investment directions to ensure balance and connection of the production system in each unit and between units within the Group; (4) HR development: Focusing on tranning specialized HR to ensure the requirement of management in the context of science and technology development and the market fluctuations; developing succession staff; attracting and recruiting young and capable staff; (5) Research and development: Implemented research on technology, machinery, and trial production of new items such as filament core yarn and new blended yarns to flexibly meet the changing market demands; developing new markets for products with special features such as fire retardant, puncture resistance, and waterproofing.

The Group’s Board of Directors determines that in the short and medium term, the market will still contain many risks when Vietnam’s competitive advantages are weaker than other textile-garment manufacturing countries worldwide. In that context, in 2023, the Board of Directors of Vinatex organized 13 meetings, issued 22 Resolutions, and 4 Decisions with the following contents: (1) Strategy and investment: Developing Vinatex Restructuring Project for the period 2021-2025, with a vision to 2030; Approving investment projects at member units; Directing the divestment at units according to the approved restructuring project; Organizing the development of regulation system in the Group to ensure the operation of legal corridor. (2) Human Resources: Participating in the development and implementation of internal training activities within the Group; Coordinating with the Executive Board to organize the Human Resources Conference, and human resource management program at the units. (3) Market, risk management: Updating, analyzing, evaluating, and forecasting the global textile and garment market; regulations on new trends affecting the industry and macroeconomic factors; Identifying, warning risks, monitoring business results and quarterly inventories of major fashion brands that are customers of enterprises within Group; Closely coordinate with the Group’s Board of Supervisors to evaluate manufacturing activities and the capital representatives activities at the units.

The Board of Directors’s activities focus on several highlights: (1) Focusing on R&D, production of special and high-tech products, signing a cooperation agreement on manufacturing of fire-retardant fabrics with the Coats Group (UK) and will have the first export shipment to the US market in July 2024; Trial production of filament core yarn. (2) Market promotion and focusing on high-value-added products and shifting to meet new demands, compensating for the decline of traditional products: Introducing Phong Phu towels into the US market, preparing to build a towel production chain in the North (Ha Dong Textile and Nam Dinh Textile); Shifting to the blended fibers production with a high recycled component to meet market demand: average of over 25% in the Vinatex system (over 50% at Phu Bai Yarn). (3) Extending the supply chain towards a closed-loop supply chain: Yarn to the weaving & dyeing – Viet Thang reached 70% of yarn through weaving, 35% in Nam Dinh; connecting the yarn sector with domestic manufacturers (especially FDI); consolidating the weaving – dyeing industry to increase the use of grey fabric. (4) Digital transformation to enhance management efficiency: Complete basic digitalization at the Group’s Office and yarn sector; Cost management through digitalization data. (5) Taking human resources as the foundation for development: Phase 2 of the Young Talent program training; On-demand training for management staff at key units: Viet Thang, Phong Phu, Phu Bai, Natexco.

With synchronous and effective solutions, Vinatex has completed and surpassed the targets set by AGM 2023. Specifically, consolidated revenue reached VND 17,612 billion, equivalent to 106.7% of the plan, with the separate financial result reaching VND 2,008 billion, equivalent to 105.7% of the plan; Consolidated profit reached VND 538 billion, equivalent to 145.5% of the plan, with the separate financial result reaching VND 133 billion, equivalent to 102.9% of the plan.

Chairman of the Board of Directors of Vinatex, Mr. Le Tien Truong, shared that the common spirit of textile workers is always steadfast, united, brave, and creative in all situations. The efforts of the Group’s Executive Committee and member units during recent times are highly commendable because the decisions of the leaders are all crucial ones. The Board of Directors understands that the decisions of 2023 were all difficult. Most yarn and weaving enterprises had to sell below production cost. Without the bravery, passion for the job, and ultimate responsibility towards the enterprise they manage, just stopping production for 1-2 months would have made it impossible to achieve the business results of 2023. We need to maintain this spirit to overcome difficult periods and if any element is missing from the slogan “RESILIENT – BRAVE – UNITED – CREATIVE” it will also be an obstacle to achieve success.

Determined to achieve 5 key goals and tasks

The Vinatex leadership assessed that the market in 2024 is still full of uncertainties and unpredictable while signs of recovery from the market are not sustainable and risky. Therefore, Vinatex has set a target of consolidated revenue for 2024 of VND 17,900 billion, accounting for 101.63% of the same period, of which the revenue of the Holding Company is VND 2,070 billion, equivalent to 103.06% of the same period; Consolidated profit reached VND 550 billion, equivalent to 102.13% of the same period, profit of the Holding Company reached VND 150 billion, equivalent to 112.17% of the same period in 2023.

Setting out the missions throughout 2024, Mr Chairman clearly stated 5 key tasks including:

1. Closely following the Group’s development orientations in the medium and long term;
2. Frankly recognizing the position in the supply chain;
3. Transparency of difficulties and development opportunities;
4. Thoroughly analyzing market information and competitors to direct and manage;
5. Innovation, creativity, and flexibility in production to seize opportunities and adapt to the market.

At the same time, continue to implement 5 commitments including:

1. Implementing commitments and initiatives on environment, society, and corporate governance (ESG);
2. Participating in the supply chain with a firm position, being a preferred partner of major manufacturers and distributors in the world;
3. Continuously forecasting the market and providing adaptation solutions;
4. Building the strategic goal within the Group of ” One-stop destination for comprehensive textiles and fashion solution”;
5. Training staff to meet new market and technology requirements.

2024 Annual General Meeting of Vinatex

General Director Cao Huu Hieu stated that in 2024, the Vinatex Board of Directors’ Office will also focus on implementing a number of key tasks and solutions to improve productivity and product quality;  in-depth investment, technical innovation, and enhance production capacity based on existing infrastructure; strengthening the capacity of the garment industry in design and marketing to increase the proportion of high-value export goods such as OEM/FOB in total revenue; continuing research and development programs for new products like fire-retardant fabric, filament core yarn, and yarn and fabric with special features; accelerating the operation and implementation of digital transformation; completing and updating the risk management handbook to prevent and provide timely operational solutions, limiting risks for the Group and its member units; continuously updating regulations and mandatory requirements on sustainable development and green production to proactively apply into the manufacturing; monitoring the compliance of units regarding environmental protection, occupational safety and health, and carbon emission management.

Regarding the challenges of Vinatex as a labor-intensive enterprise, Mr. Pham Van Son – General Director of the Department of General Affairs, Commission for the Management of State Capital at Enterprises, highly appreciated the management results of the Board of Directors and the Executive Board of Vinatex in 2023. The state capital at Vinatex, managed by SCIC, was preserved, and a dividend of 3% was distributed, which was a success when many businesses struggled with an unfavorable market. As a labor-intensive Group, with social security responsibility for more than 62,000 direct employees of level 1 and over 150,000 employees of level 2, ensuring the living and income of employees with an average of nearly VND 9.5 million/person/month was one of the highlights of Vinatex in 2023.

“Many economic experts predict that 2024 and 2025 will still face many risks and unpredictable developments. Therefore, Vinatex needs to consolidate resources and build quick, efficient, and decisive policies to effectively implement the restructuring plan for the 2021-2025 period, orientation to 2030, and stabilize the living conditions and employment for employees through salary and income solutions. Most importantly, given the characteristic of the textile-garment industry where profits depend on labor productivity, this will be the guiding principle for Vinatex to propose to the Government regarding the salary mechanisms for management staff and employees,” Mr. Pham Van Son emphasized

Reporters

Translated from the article published in the May 2024 issue of Textile-Garment and Fashion Vietnam Magazine.