Fabricato Posts Another Net Loss for 1Q 2024, Inks Brazilian Alliance Deal
Medellin-based textile giant Fabricato announced April 30 a first quarter (1Q) 2024 net loss of COP$13.5 billion (US$3.45 million) — a 41% improvement year-on-year, but continuing a string of net losses that have plagued it for more than a year.
Gross revenues for 1Q 2024 also declined year-on-year, to COP$68 billion (US$17.3 million), although earnings before interest, taxes, depreciation and amortization (EBITDA) actually improved by 167% year-on-year, to COP$3 billion (US$766,000), according to the company.
The company blamed the continuing losses on a “textile market with contracted demand both nationally and internationally.”
“However, the company remains optimistic as it executes strategies in product innovation, circular economy and process optimization that help improve its competitiveness — and the results of the [1Q 2024] period ensure business continuity [which] can be evidenced in the reduction of costs and operating expenses year after year and in the transformation of production processes seeking greater efficiencies,” according to Fabricato.
“Due to the weakening of the economy, during the first quarter of 2024 the risk of a reduction in textile sales materialized, which decreased by 32% in value compared to the first quarter of 2023. That affected the working capital required for the timely supply of raw materials and the payment of obligations.
“Furthermore, another important impact on the textile business originates from smuggling, since fabrics that are offered in the market at prices that do not cover the cost of raw materials enter the country illegally. This situation forced the company to close its denim production line.
“In relation to cotton, the main raw material, during the quarter the price had an upward trend, reaching a maximum of US$101.08 [per 100 pounds] on February 27. The year began at US$80.87 and closed March 2024 at US$91.96, an increase of 14% between January and March,” the company added.
Brazil Alliance Deal
Meanwhile, Fabricato simultaneously announced April 30 a “commercial and business alliance with Capricornio,” the second largest textile company in Brazil.
“We will offer denim fabrics of very good quality and very competitive in terms of price that we did not have, thus expanding our denim offer — imported from Brazil,” company president Gustavo Alberto Lenis announced.
“Fabricato’s internationalization and export vocation is based on its portfolio of drills and specialized fabrics and will be consolidated within the framework of Fabricato’s commercial and business alliance with the Brazilian textile company Capricornio,” according to Fabricato.
“This commercial alliance will ensure that the two companies take advantage of their manufacturing advantages to serve the markets of Colombia and Brazil with the qualities and competitive prices that clients and end consumers require in denim, drills and specialized fabrics.
“Fabricato will be able to serve with its offer of specialized drills and textiles to the Brazilian market that does not currently enjoy the portfolio and quality that Fabricato offers in these categories.
“This is how Fabricato continues to move forward without disappearing from the markets where unfair competition, smuggling and under-invoicing deprived Fabricato of producing denim in Colombia,” the company added.
