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Foton Industries, The World'S Largest Knitwear Manufacturer, Cancels Orders? 2019 Revenue Exceeded 6 Billion 600 Million Yuan

2020/3/27 11:01:00 72

Futian Industries2019 RevenueFabric Business

Since March, textile and garment enterprises in various parts of the country have resumed the resumption of production and production. However, the overseas orders of textile and garment enterprises are gradually weak and continuously reduced due to the global epidemic situation.

In March 21st, friends of the circle out of such a screenshot, some netizens said, "Futian one day canceled 4500 tons of orders, including hundreds of tons", it is to let many spectators cold.

Futian industry is one of the largest cylinder knitted fabric producers in the world. It provides highly vertical integrated services such as knitting, dyeing, printing and finishing. In addition to the core business of producing and selling knitted fabrics, the company's products include yarn, sewing thread and ready-made garments.

Fukuda has previously announced that the company entered into the 2022 procurement framework agreement in November 29, 2019 with the world's largest color supplier and manufacturer Huafu for 3 years. According to the agreement, Huafu holdings agreed to supply cotton yarn, cotton blended yarn, colored spun yarn and other products that may be needed to the group. The announcement shows that the upper limit of procurement in 2020, 2021 and 2022 is the year of purchase. They were HK $600 million respectively.

As a supplier of Main knitted fabrics, Foton industries provides garments to garment manufacturers in over 40 countries, producing garments made of sportswear, casual wear, pajamas and underwear, and many other well-known international retailers and brands. The company has production facilities in China, Sri Lanka and Indonesia.

Affected by the spread of the epidemic and the initiative to reduce low value orders, Futian industries achieved a HK $6 billion 606 million operating income of HK $12.1% in 2019, a year-on-year decrease of 12.1%, a gross margin of HK $761 million, a decrease of 7.3% over the same period last year, and a profit of HK $141 million for shareholders, a decrease of 12.3% over the same period last year.

During the reporting period, the shipment volume of Futian industries decreased by about 19.3% on average, while the average selling price increased by 7.1% annually due to changes in the product mix. Because of the relatively stable price of cotton yarn in 2019, the group's gross profit margin in 2019 was slightly higher than 0.6% to 11.5% in the same period last year.

During the reporting period, the core business of Futian industry - the manufacturing and sales of colored cloth and yarn accounted for 87.9% of the company's revenue. The income from manufacturing and selling garments accounted for 12.1%. of the company's operating income. The gross profit margin of the company was 11.5% and its turnover decreased by 12.1%, mainly due to a reduction of 19.3% in sales of fabrics. The gross profit margin is higher than that of 19.3%., which is mainly due to the rising average selling price of fabrics.

Up to now, Futian has formed a new production pattern of three main fabrics, marked by "fine, excellent and special", namely, Jiangyin Fuhui Textile Co., Ltd. ("Jiangyin Fuhui"), Dongguan Sha Tin Li Hai textile printing and dyeing Co., Ltd. ("Sha Tin Li Hai") and Yancheng Fuhui spinning and Weaving Co., Ltd. (Yancheng Fuhui), a new pattern of production capacity, manufacturing capacity has been significantly enhanced. Among them:

Jiangyin Fuhui fabric factory was built in 2001, and now its production capacity reaches 12 million 500 thousand pounds of finished fabrics, which is the main production enterprise of Futian industry.

Sha Tin Li Hai fabric factory was built in 1998. Now its production capacity is 7 million 500 thousand pounds of finished fabrics. After production and management mode reorganization and fabric printing, chemical fiber dyeing and dyeing workshop transformation and upgrading, we have made full use of special varieties and structural fabrics to become the backbone material manufacturer of Futian industry.

Yancheng Fuhui fabric factory was built in 2009, and now its production capacity reaches 4 million 500 thousand pounds of finished fabrics in the month. Through the upgrading of equipment and the upgrading of technology and product development standards, Futian industries will develop in the direction of PRC product development and fine products for Japan and China's domestic market.

Fukuda said that since 2019, the textile market has been complicated and changeable, and the business environment has been deteriorating. Since the end of 2019, the company has decided to reduce the low value order, voluntarily abandon the order needs of low price customers, and strive to raise the average selling price level. At the same time, the company takes decisive measures to adjust sales strategy, and strive to ensure the quality of the top 20 customers, so as to stabilize the order quantity of the basic varieties, and actively develop the needs of small quantities of high-value varieties, meet the needs of trial production and development of new varieties of main customers, and increase the supply capability of high value products, so as to enhance the sales price and optimize the production cost structure.

It is reported that Futian industries in China all factories have been reproduced before the end of February. The company expects that under special circumstances, the epidemic will have some impact on financial performance, and it is expected that it will not return to normal level until the second half of 2020.

Statistics from the National Bureau of statistics and China Customs show that since 2020, the textile industry has been affected by the epidemic and the pressure of economic operation has increased significantly. In 1~2 months, the added value of textile industry (including spinning, weaving, knitting, printing and dyeing, household and industrial products) decreased by 27.2% compared with the same period last year. The added value of garment industry decreased by 28.9% compared with the same period last year, and the chemical fiber industry decreased by 10.7% compared with the same period last year. The total output of 15 major categories of statistics increased negatively, and over half of the total negative growth rate exceeded 30%. The total retail sales of clothing, shoes and hats and needle textiles decreased by 30.9% compared with the same period last year, and the retail sales of online wear products decreased by 18.1% over the same period last year. The decline was obviously higher than that of rigid consumer demand products such as food and daily necessities. The total export volume of textiles and clothing was 29 billion 830 million US dollars, down 20% from the same period last year.

Not returning to work and waiting for death is the plight of many textile and garment manufacturers including Futian industries.

The industry believes that since the outbreak of the new crown outbreak, the impact of China's epidemic caused global industrial chain disruption, accelerating the industrial chain from China's relocation concerns increased significantly. However, Fangchuan securities analyst Tao Chuan said that the direct impact of the epidemic on exports has emerged. The two impact of the overseas epidemic on exports is still being fermented, which is a major concern for the future. From the supply side, the short-term impact of the epidemic on exports is mainly reflected in the tight supply chain of the manufacturing industry due to the obstruction of freight traffic, and the slowdown in the production delay of the enterprises, which prolongs the delivery period of the original export orders. Unlike the SARS epidemic, the new crown epidemic will more reflect the demand of the global economy. In particular, the slowdown in China's main export destinations and the weakening import demand will further drag on China's exports.

Xie Yaxuan, China Merchants Securities, admitted that after the 2008 financial crisis, China's continued participation in the global value chain continued to decline, indicating that China could replace and reduce imports of intermediate goods through upgrading the industrial chain. Zhang Bin, Wang Yaqi and Zou Jingxian, based on the calculation of the production industry chain and the value added rate of exports, found that China's export value added rate has been increasing continuously, from 69% in 2000 to 84% in 2014. The export value added rate of processing trade and general trade increased from 56% and 85% to 78% and 89%, respectively, with an increase of 22 and 4 percentage points, respectively. Three. Through the decomposition of the export value added rate, we find that the most important contribution to the increase in export value is the intra industry effect rather than the inter industry effect. This shows that the technological upgrading routes of Chinese manufacturing enterprises choose more to replace imported intermediate products rather than export new ones.

Xie Yaxuan believes that with the gradual disappearance of demographic dividend, China's labor cost advantage gradually diminished. The export delivery value of typical labor-intensive industries such as textile, clothing, furniture, fur, feathers, shoes and stationery, entertainment and other industries accounted for 2008 of the main business income of the industry. It has been declining for many years, indicating that the relocation of these industries has been going on, especially in countries with labor advantages around Vietnam, Burma and Kampuchea.

Jiang Fan, a first class inspector of the Ministry of foreign trade of the Ministry of Commerce, said recently that the new crown epidemic is spreading all over the world. In the next few years, foreign trade enterprises may encounter problems of external demand and order reduction. For this reason, the Ministry of Commerce and foreign trade departments and various departments and departments have introduced policies of stable foreign trade, focusing on the means of finance, finance, export credit insurance, which are permitted by WTO rules. Support foreign trade enterprises to protect the market, protect orders, guide enterprises to do a good job of risk prevention.

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