China'S Top 500 Companies Close Spinning Production Workshop Shut Down, The Impact Of The Epidemic Intensified?

Yesterday afternoon, the textile people circle of friends widely spread this picture, a company close spinning production workshop stopped production.

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? ? ? As a result, in the evening, Jiangsu Sanfangxiang Industrial Co., Ltd. (hereinafter referred to as "Sanfangxiang"), a local cotton textile and printing and dyeing backbone enterprise of China's top 500 enterprises, issued an announcement. Considering the market environment and the company's operating costs, the company estimated that it would be difficult for the tight spinning production workshop to resume normal production and turn around the deficit in a short time. In order to avoid further losses, the company announced that The company decided to stop production of compact spinning workshop. The shutdown of compact spinning workshop will reduce the company's operating loss, reduce its negative impact on the company's performance, and help the company to focus on the management of its ongoing production and operation. Sanfangxiang also disclosed its semi annual report, with a net profit of 21.4 million yuan in the first half of the year, a year-on-year decrease of 25.49%.

The full text is as follows:

Sanfangxiang (600370. SH) announced that the 17th meeting of the 9th board of directors deliberated and passed the "proposal on the company's compact spinning production workshop to stop production", and decided to stop production of the company's compact spinning production workshop.

The compact spinning production workshop of the company was built in 2008. The main equipment are Kamo spinning machine, comber unit, automatic winder, blowing carding unit, etc. it produces all kinds of cotton yarn and blended yarn. The downstream customers are mainly used to produce grey cloth and various textiles. By the end of June 2020, the net book value of compact spinning workshop equipment was 17.6973 million yuan. From January to June 2020, the sales volume of cotton yarn in compact spinning workshop was 1050.22 tons, the sales revenue was 25.1683 million yuan, and the gross profit was - 2.9886 million yuan.

Due to the low demand of textile manufacturers, some textile companies are hard to sustain the normal demand of downstream textile manufacturers. At the same time, the compact spinning workshop was built early and the production scale was small. After years of operation, the equipment energy consumption was relatively high and the competitiveness was not strong. Affected by the above factors, the production and operation of compact spinning workshop were greatly affected this year. The revenue of spinning business decreased significantly, and the profit space was further compressed, resulting in losses. From January to June 2020, the cotton yarn sales volume of compact spinning workshop was 1050.22 tons, a year-on-year decrease of 38.63%, the sales revenue was 25.1683 million yuan, a year-on-year decrease of 42.77%, and the gross profit was -2.9886 million yuan, with a year-on-year decrease of 153.90%. In this context, if the company's compact spinning workshop continues to produce, the loss will be further expanded. Considering the market environment and the company's operating costs, the company estimated that it would be difficult for the compact spinning workshop to resume normal production and turn around losses in a short time. In order to avoid further losses, the company decided to stop production of compact spinning workshop.

As the compact spinning production workshop is currently in a deficit state, it is difficult to turn the deficit back in a short period of time. The shutdown of compact spinning production workshop will reduce the company's operating losses, reduce its negative impact on the company's performance, and help the company to concentrate on the management of its ongoing production and operation. In 2019, the sales revenue of cotton yarn products in compact spinning workshop is 118.8108 million yuan, accounting for 11.41% of the company's business income, and the gross profit is 14.6058 million yuan; from January to June of 2020, the sales revenue of cotton yarn products is 25.1683 million yuan, accounting for 6.88% of the company's business income, and the gross profit is - 2.9886 million yuan. The company's business income will be reduced after shutdown. At present, the revenue scale of the workshop is small, and the shutdown will not have adverse impact on the normal production and operation activities and sustainable operation ability of the company.

The company authorizes the management to handle the matters related to the shutdown of the compact spinning workshop, properly resets and distributes the employees. In the future, the company will decide whether to resume production and operation according to the market situation, actively seek opportunities for foreign cooperation, and make full use of the remaining use value of assets.

The situation of textile industry is more severe

According to the data, the textile town of Suzhou Shengze area, the recent loom start-up rate in 60-70%. According to media reports, some weaving factories have shut down. In addition, according to the data of circulation branch of China Textile Federation, in the first half of 2020, due to the impact of Xinguan epidemic situation and a large number of overseas orders, the textile and clothing professional market in various regions has declined sharply. From January to June, the total transaction volume of 45 textile and garment specialized markets (including market groups) monitored by the circulation branch was 407.933 billion yuan, a year-on-year decrease of 23.72%; among them, the total transaction value from January to March decreased by 39.64% year-on-year, and that from April to June decreased by 6.18% year-on-year, with a significant narrowing compared with that in the first quarter, indicating a strong recovery of professional market operation in the second quarter.

Industry insiders said that the upstream textile manufacturing industry has been affected by the domestic and overseas epidemic. At present, the foreign epidemic continues to spread, and there is still uncertainty in foreign demand, so we need to be cautious for the time being. In the medium and long term, with the gradual weakening of the international competitiveness of the textile industry and the outward transfer of production capacity, leading companies with strong bargaining power and global layout will have faster growth rate than the industry and stronger ability to resist risks.

For the textile and clothing industry, the industry development dividend brought by the previous domestic clothing consumption Branding Trend and export prosperity is no longer any longer, the industry development is more mature, the growth rate is slowing down, and the competition is intensifying. At the same time, the industry is gradually divided, and there are some development opportunities in the field of subdivision. Generally speaking, both the downstream brand clothing industry and the upstream textile manufacturing industry need to improve their business efficiency and comprehensive competitiveness in order to face more severe industry environment and competition situation.