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Most of the units within the Vinatex Group still do not have sufficient orders for the final months of the year.

Struggling due to difficult partners

In early October, Noble House Home Furniture LLC (Noble House), a manufacturer, distributor, and retailer of furniture with over 30 years of operation, filed for bankruptcy protection in the US amidst inflation and weakened consumer spending, impacting the company's financial situation. The difficulties in the market on the other side of the hemisphere are increasingly affecting the production and business activities of Vietnamese companies. According to the reporter's observations, there are currently two Vietnamese wood furniture manufacturing and export companies that are partners of Noble House and have spoken out about the situation. Among them, Cam Ha Corporation stated that Noble House's revenue accounted for an average of 50% of their total revenue. Currently, Cam Ha is making efforts to participate in the bankruptcy proceedings in order to recover the amounts owed by Noble House.

For Phu Tai Corporation, they mentioned that Noble House only accounted for a small proportion, less than 5%, of their total revenue in the US market. Therefore, Noble House's declaration of bankruptcy does not significantly impact Phu Tai's production and business operations. Phu Tai mentioned that the bankruptcy protection was to serve the restructuring process of Noble House, and the company was still in contact with Phu Tai to maintain regular business operations and make payments according to the court's decision.

Meanwhile, Phu Tai's business results for the third quarter and the first nine months of 2023 showed disappointing figures. Specifically, the consolidated revenue in Q3/2023 was estimated to be about VND1,202 billion, and the pre-tax profit is VND94.5 billion, decreasing by 22% and 36% compared to the same period in 2022, respectively. For the accumulated nine months, Phu Tai's revenue was estimated at VND4,102 billion, a 21% decrease, and the pre-tax profit was VND295 billion, a 43% decrease.

Although not facing the bankruptcy of partners, Garmex Sai Gon Corporation (GMC), a major textile and garment export company in HCM City, has found itself in a challenging situation in Q3/2023 when the company had no orders, leading to a 99% decrease in revenue. GMC only recorded VND73 million in revenue for the quarter. For the accumulated nine months, GMC's revenue only reached VND8 billion, a significant decrease compared to VND275 billion in the same period in 2022, with a loss of over VND44 billion. According to GMC's leadership, as there were no orders, the company balanced its workforce, downsized its operations to suit the new situation, and reduced costs to minimize losses.

At a recent extraordinary shareholder meeting, GMC's leadership stated that from the beginning of the year until now, the company has cut nearly 2,000 employees, with only 35 remaining. Since the beginning of 2021, the number of employees has decreased by nearly 3,800 people.

GMC's difficulties are related to the shortfall from its partner, Binh Thanh Import and Export Production and Business Corporation (GIL). Earlier, GIL filed a lawsuit against Amazon Robotics LLC in New York, alleging that they suddenly narrowed down orders, resulting in excess production capacity and raw materials for GIL.

The Q3/2023 financial report of Thanh Cong Textile-Garment-Investment-Trading JSC also recorded nearly VND780 billion decrease in export revenue for the first nine months, equivalent to a 26% decrease compared to the same period in 2022, reaching only VND2,219 billion. The company mentioned that normally, the fourth quarter is the season for preparing for festivals and the Lunar New Year. However, this year's demand for shopping and orders is slower than in previous years due to the continued economic difficulties and slow recovery. Currently, the company still hasn't received enough orders for the year-end and its operations have not reached full capacity.

Reducing revenue and profit targets

Unsatisfactory business results in the third quarter are making it more challenging for companies to achieve the profit targets they set at the beginning of the year. This is especially the case as the major export markets, despite showing signs of recovery, are doing so at a very slow pace. In response to this reality, some companies have started to announce adjustments to lower their full-year business targets.

For example, the Board of Directors of Sao Ta Corporation (FMC) recently issued a decision approving a series of adjustments to reduce various production and business targets for 2023. Among these, the revenue target was reduced by 17%, down to VND4,870 billion, and pre-tax profit was reduced by 25%, down to VND300 billion. This means that FMC plans to achieve a profit this year that is more than 6% lower than the actual results in 2022. According to the Q3/2023 financial report just released, despite some improvements, the pre-tax profit for the first nine months decreased by 13% compared to the same period in 2022, only reaching VND216 billion. FMC has achieved 72% of its adjusted plan.

The Board of Directors of the Vietnam National Textile and Garment Group (Vinatex) is also soliciting shareholder opinions regarding adjustments to their 2023 production and business plans, which involve a 6% reduction in revenue targets and a 39% reduction in pre-tax profit targets, down to VND16,500 billion and VND370 billion, respectively. Currently, while the Q3/2023 financial report has not been released, during a discussion on the production and business orientation for 2024, Vinatex's leadership announced that after the first nine months of 2023, the company had achieved 71% of its revenue and 40% of the profit plan proposed at the General Meeting of Shareholders, equivalent to estimated revenue of over VND12,400 billion and pre-tax profit of more than VND240 billion. Compared to the adjusted plan currently soliciting shareholder opinions, Vinatex has achieved 75% of revenue targets and 65% of profit targets after nine months.

Regarding the situation for Q4/2023 orders, the majority of the units within Vinatex have still not received enough orders for the last three months of the year. In the current situation of scarce orders, these units have to accept small and less profitable orders, which may be outside of their core business, in order to ensure employment for their workers.

The difficulties of export companies are also affecting businesses in the transport and logistics sectors. The Board of Directors of Hai An Transport and Stevedoring JSC recently passed an adjustment to their 2023 plan, with a 10% reduction in revenue targets compared to the plan set at the beginning of the year, down to VND2,669 billion; and an almost 19% reduction in pre-tax profit targets, down to VND400 billion. This target is much lower than the over VND1,000 billion in profit that this company achieved in 2022.

According to information released by Hai An Transport and Stevedoring JSC, in the first eight months of 2023, the total revenue of the company reached VND1,946 billion and consolidated post-tax profit was VND288 billion. Compared to the adjusted plan, the company has achieved 73% of revenue targets and 72% of post-tax profit targets.