Thu, Apr 12, 2018 - Page 12 News List

Quang Viet optimistic on year due to rising prices

STRATEGIC BASE:The garment maker said it could take advantage of the benefits of Vietnam’s free-trade agreements to avoid tariffs from a possible US-China trade war

By Kuo Chia-erh  /  Staff reporter

Garment maker Quang Viet Enterprise Co (廣越企業) yesterday provided positive guidance for its earnings performance for the whole of this year, thanks to a widening differential between product prices and material costs.

“We expect gross margin to return to 2016’s levels, partly because the company has more bargaining power when negotiating with brand clients this year,” Quang Viet president Charles Wu (吳朝筆) told an investors’ conference in Taipei, citing robust customer demand.

The company plans to raise the average selling price of its products by between 3 percent and 5 percent this year to truly reflect production costs, Wu said.

Quang Viet, one of the largest down jacket suppliers in the world, saw its gross margin fall from 16.74 percent in 2016 to 13.95 percent last year, as it had to absorb surging duck feather costs and foreign exchange losses.

Alongside rising product prices, the Taipei-headquartered company has set an annual sales growth target of between 15 percent and 20 percent for this year, due to increasing orders from its two major clients, Patagonia Inc and North Face Inc.

Quang Viet also expects to add five brand-name clients this year, including Mammut Sports Group AG, Under Armour Inc and New Balance Athletics Inc.

The five new clients are forecast to bring nearly US$11 million in orders, the firm said.

Asked about the possible effects of a brewing trade war between China and the US, Quang Viet said it was not worried about the trade dispute, as it can still take advantage of the zero-tariff benefits of Vietnam’s free-trade deals.

The garment maker operates 357 production lines at six overseas manufacturing bases in four countries: Vietnam, China, Romania and Jordan.

“Some of our peers are planning to shift their manufacturing to Vietnam [because of the possible US-China trade war] to avoid high tariffs,” Wu told investors.

Quang Viet, which has capacity for 950,000 articles of clothing per month, is working on several capacity expansion projects to meet rising customer demand.

The firm plans to add 20 production lines at its plant in Vietnam’s Tien Giang Province and build 20 lines at its new plant in Long An Province.

Quang Viet said it also plans to build two lines at its Jordan plant, which is expected to generate revenue of US$13 million this year.

The company has yet to release its earnings results for last quarter, but said cumulative revenue in the first quarter reached a record high of NT$1.16 billion (US$39.7 million), up 47.72 percent from a year earlier.

Quang Viet shares edged up 0.4 percent to close at NT$124.5 in Taipei trading yesterday.

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