Fabricato 1Q 2020 Net Loss Declines Year-on-Year; Coronavirus Slams Sales
Medellin-based textile giant Fabricato revealed in a May 1 filing with Colombia’s Superfinanciera oversight agency that its first quarter (1Q) 2020 net loss totaled COP$8.97 billion (US$2.26 million) — a 33% improvement over the COP$13.3 billion (US$3.35 million) net loss in 1Q 2019.
Earnings before interest, taxes, depreciation and amortization (EBITDA) soared by 200%, to a positive COP$1.5 billion (US$378,000), up from a negative COP$1.5 billion (US$378,000) in 1Q 2019.
Gross revenues declined 3.7% year-on-year thanks to the Coronavirus quarantine that started in March 2020, the company noted.
While January and February 2020 sales were positive, the bottom fell out in March “due to the Covid-19 pandemic,” according to Fabricato.
“For Fabricato, accumulated in the months of January and February 2020, revenues were 15% higher than in the same period of the previous year.
“When the month of March is included, the comparison is distorted because it was a 20-day month, in which we estimate that we stopped billing COP$16 billion (US$4 million).
“The closure of retail outlets, the stoppage of production of the entire production chain, social distancing, little knowledge about the disease, uncertainty about the development of a vaccine and the degree of intervention of governments in their respective economies are just some of the unanswered issues. And the main aggravating factor: uncertainty about how long it will be.
“At the end of this first quarter of 2020, an opportunity is perceived for Fabricato, which is the increase in demand for textiles with special finishes such as anti-fluid and anti-bacterial used in the health sector.
“Another issue that will surely become relevant in this process of emerging from the crisis is the strength of the business chain, of strategic relationships with suppliers and customers. In the case of Fabricato, having large companies as suppliers, holding state-of-the-art technology in both fibers and chemicals, will allow us to react with the speed necessary to meet this new demand that arises from the health sector.
“On the side of our clients, as they are also solid and structured companies, we think that most of them will be able to adjust to the new market conditions with the speed necessary to overcome this contingency.
“For this same reason, Fabricato has approximately 70% of its portfolio insured, which will certainly serve as a guarantee for future loans — necessary to finance part of the [supply/demand] mismatch that will occur due to the lower level of sales, especially in the months of March, April and May.
“Fabricato — having received [government] permission to partially start its activities (approximately 25%) from April 7 — will reach sales in the order of 30% of the budgeted value, which added to 55% sales levels in March and 60% estimated for May, collectively represent an average reduction of 52% in this period.
“It is also estimated that the [textile/clothing] trade will restart its activities with a 40% reduction, which means that the entire production chain will be affected in its turnover in the coming months,” the company added.