Fabricato Posts Net Loss for 1st-Nine-Months of 2023
Medellin-based textile/clothing giant Fabricato announced November 14 a nine-months 2023 (January through September) net loss of COP$78 billion (US$19.6 million), down sharply from a net profit of COP$8 billion (US$2 million) for the comparable first-nine-months of 2022.
Revenues for nine-months 2023 also came-in sharply lower year-on-year, at COP$277 billion (US$69 million) versus COP$370 billion (US$93 million) in nine-months 2022, while first-nine-months 2023 earnings before interest, taxes, depreciation and amortization (EBITDA) also dipped year-on-year, resulting in a negative COP$22 billion (negative US$5.5 million), according to the company.
Fabricato blamed the losses on “the economic slowdown that Colombia is experiencing and which is reflected in the different sectors of the economy.”
“Although fashion consumption in Colombia has been growing in terms of value, in terms of units there is an opposite effect and lower consumption negatively impacts the demand for textile input, with a direct effect on our sales.
“Sales in 3Q 2023 presented a reduction of 34% versus the same period in 2022 and a cumulative annual decrease of 35%,” the company added.
“Our exports maintain a growing behavior, as in 3Q 2023 there are no significant variations compared to the same period in 2022. Meanwhile, the accumulated annual figure shows a growth of 22%.
“The distribution of sales by destination countries are Ecuador (36%), Mexico (21%), Peru (16%) and 12 other countries (27%). Fabricato continues to see a great opportunity for growth in the external market, reflected positively during this year.
“On the other hand, national sales present a reduction of 36% for the third quarter and an accumulated annual reduction of 38.4%. This is a consequence of lower consumption in the main national brands and stock rotations, lower consumption in state tenders (Military Forces) and lower dynamics of stock sales of the main textile distributors,” the company added.
Meanwhile, “we have maintained a balanced pricing strategy for the third quarter and for the main products an average price reduction of 2%, consistent with the behavior of international cotton prices and the variation in the TRM [Colombian peso versus U.S. dollar].
“We continue to advance in the development and production of natural fibers other than cotton. We have equipment installed for their preparation. These natural fibers — other than cotton— are processed in the same machinery used to process cotton fiber.”
In parallel, “work has been done on the development of our product portfolio with recovered fibers in all product lines, obtaining textiles with up-to-50% post-consumer fiber,” the company added.
Responding to soft market demand for clothing here in Colombia, “inventories as of September 2023 decreased by 35% compared to the same period of the previous year,” according to Fabricato
At the same time, “financial expenses as of September 2023 increased by 52% compared to the same period in 2022, which correspond to higher interest rates, the reprofiling of the debt with national banks and negotiations with different companies at an international level,” Fabricato concluded.
