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Fabricato Textile Factory Fabricato Textile Factory Source: Fabricato

Fabricato Trims Losses in 3Q 2018

Published in Companies Written by  November 04 2018 font size decrease font size increase font size 0
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Medellin-based textile giant Fabricato on November 2 posted a third quarter (3Q) net loss of COP$9 billion (US$2.8 million), an improvement over the COP$19 billion (US$5.9 million) net loss in 3Q 2017.

Earnings before interest, taxes, depreciation and amortization (EBITDA) also improved year-on-year, with a positive COP$909 million (US$285,000) in 3Q 2018 versus a COP$6 billion (US$1.9 million) net EBITDA loss in 3Q 2017.

Sales also rose 13.6% year-on-year, to COP$96 billion (US$30 million), from COP$84.9 billion (US$26.6 million) in 3Q 2017.

As for nine-months (January through September) 2018 results, Fabricato’s net loss rose to COP$28 billion (US$8.8 million) versus a net loss of COP$13 billion (US$4 million) in nine-months 2017. However, EBITDA improved to a positive COP$5.6 billion (US$1.7 million) versus a negative COP$1.5 billion (US$471 million) in nine-months 2017.

Commenting on the latest results, Fabricato pointed out that “the third quarter of 2018 continued presenting the trend of moderate recovery of the [Colombian] economy, perceived since the beginning of this year.

“Some indicators such as controlled inflation, the low basic interest rate and the price of oil above US$80 per barrel allow us to believe that this scenario will remain positive, which generates a favorable environment for the country's economic activity.

“In relation to the textile sector, a resumption of the natural business cycle is perceived, that is, an increase in sales was noted in the third quarter of this year, a sign that the garment industry is preparing for a higher volume of sales for the end of the year.

“The retail sale of garments, accumulated to September 2018, indicated an estimated growth of 5% [year-on-year], which should reflect a resumption of the garment production sector and consequently of the textile sector.

“However, what’s important to note in this case is the increase in the imports of garments made for the large retail chains, which will surely reduce the transfer of the positive impact of their sales to the Colombian productive sector.

“When the new [Colombian national] government took office [this year], hopes were renewed regarding the fight against smuggling and informality, the main problems of the textile and clothing sector in Colombia.

“Some campaign promises, such as the reduction of VAT [value-added tax] for the textile sector, may face political resistance and face difficulties in its processing. However, measures such as the review of import tariffs and thresholds for imports are expected in the short term, as well as anti-dumping measures, which would be the beginning for the restoration of an environment of legal competition in Colombia and the consequent reactivation of this sector so important for the generation of jobs.”

As for the future, “we remain convinced that all of Fabricato’s efforts should be aimed at generating value for our clients, either because of the excellence in the product offer, or because of the speed of response, which is increasingly relevant in the purchase decision, with adequate prices.”

As for Fabricato’s real-estate business ventures, the company reported that its “Ciudad Fabricato” project continues to generate more revenues, while the former “Riotex” factory in Rionegro has achieved 55% leasing of available space to commercial third parties.

“In the case of full occupation [of the former Riotex factory], the leases of the industrial park should generate annual revenues between COP$5.5 billion [US$1.7 million] and COP$6 billion [US$1.9 million]. To this value should be added what will be received for the services available to the tenants, such as water and steam,” Fabricato added.

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