Annual Report Of Textile Enterprises: High Cotton Price &Nbsp; "High-Risk" Inventory

Because of the European sovereign debt crisis, RMB appreciation The impact of multiple factors such as rising raw material prices, increasing labor and labor costs, and increasing energy saving and emission reduction has brought enormous pressure to the textile foreign trade industry.

Published Listed textile companies Most of the textile enterprises in the annual report said that the rising cost of raw materials caused the cost pressure of the company and had an impact on the operation of the company. Among them, Lu Tai A said that the increase in the price of products promoted by the price of raw materials is lagging behind, which has a certain impact on the improvement of the gross margin of the company's products.

Cotton prices rose

Spinning companies are busy increasing inventories

　　 Raw material prices rise So that enterprises generally dare not purchase raw materials in large quantities, which makes most enterprises lack stock of raw materials. According to relevant industry sources, in the face of soaring cotton prices, purchasing enterprises and textile and garment enterprises have increased their direct or indirect production costs, and they dare not want to take the risk of high price acquisitions. High cotton prices and low inventories bring unprecedented pressure to enterprises.

Last year, most textile companies began competing to buy raw materials such as cotton and substantially increased inventories. From the date of the deadline, data show that in the raw material inventory, Ordos ranks first in the top of 1 billion 400 million yuan. In addition, the inventory of raw materials, such as Huafu color spinning, cashmere industry, Rebecca, Rutai A and Huamao stock, has been greatly improved, with a sum of more than 400 million yuan.

Lu Tai A is a highly integrated vertical textile enterprise which combines cotton planting, spinning, dyeing, weaving, finishing and clothing. The leading products are shirts, dyed fabrics and shirts. During the reporting period, the company achieved operating income of 5 billion 25 million 624 thousand and 100 yuan, operating profit of 907 million 818 thousand yuan, and net profit attributable to ordinary shareholders 739 million 91 thousand and 600 yuan, representing an increase of 24.51%, 39.17% and 29.62% over the same period last year.

The annual report shows that the soaring price of the main production material (lint) and the increase of labor cost have brought some pressure to the cost control of the company. Although at the beginning of the reporting period, the company increased some stocks in the purchase of raw cotton, and correspondingly reduced the pressure of rising prices of raw materials, but because the company's export orders were mostly long orders, and the production cycle of the company's products was longer, the increase in the price of products promoted by the price of raw materials was lagging behind, which had a certain impact on the improvement of the gross margin of the company's products.

Lu Tai A said that the proportion of fixed assets of the company decreased by 5.5 percentage points, mainly due to the increase in company's prepaid cotton and inventory increase. Data show that Lu Tai A2010 inventory of 1 billion 466 million 286 thousand and 600 yuan, accounting for 20.90% of the total assets, while the company last year the number of 1 billion 229 million 494 thousand and 900 yuan, accounting for 19.51% of the total assets.

The raw materials of Lu Tai A are mainly staple cotton, and the supply and price of long staple cotton are mainly affected by market demand, climate, industrial policy, cotton reserves, RMB exchange rate fluctuations, and national cotton import quota management.

In 2010, the price of long staple cotton has experienced a substantial fluctuation. In order to reduce the impact of long staple cotton supply and price fluctuation, Lu Tai A has adopted four measures: first, by planting long staple cotton in Xinjiang Lu Tai, a subsidiary holding company, at present, the output of Xinjiang Long Tai long staple cotton can meet about 30% of the long staple cotton demand; second, the professional cotton teams established within and outside the country track the changes in the cotton market, hold weekly cotton procurement regular meetings, accurately grasp the fluctuation of the cotton market, and timely increase or reduce cotton reserves rationally; third, establish long-term and stable supply relations with the main suppliers, sign long-term orders and framework agreements; and fourth, actively acquire the quota of cotton imports in China, so as to get the initiative to flexibly allocate the proportion of domestic and foreign cotton purchase.
{page_break}

The price of wool has repeatedly increased. The operating profit of San Mao Pai Shen has increased by 31.16% over the same period last year. Due to the impact of inflation expectations, the San Mao's raw and auxiliary materials have risen sharply. Compared with the same period in 2009, the price of Australian wool market changed greatly in the 1-12 months of 2010, and the average price rose by 30%. The price of individual raw materials almost doubled compared with 2009.

According to the data, the inventory of San Mao Pai Shen in 2010 was 118 million 987 thousand yuan, an increase of 20 million 949 thousand and 800 yuan over the 98 million 37 thousand and 200 yuan in the same period last year, an increase of 21.37% over the same period last year. Inventories increased by 20 million 949 thousand and 800 yuan over the previous year, an increase of 21.37%, mainly due to seasonal stockpiling and procurement of raw materials.

In 2010, wool prices rose sharply and hit record highs, resulting in the increase of the cost of San Mao Pai Shen products, which seriously affected the company's business results.

The annual report of San Mao Pai Shen showed that the annual operating income was 216 million 610 thousand yuan, a decrease of 4.96% compared with the same period last year. After excluding the operating income generated by the sale of assets last year, the main business income actually increased by 9.96% compared with the same period last year, and the foreign exchange earning earned 13 million 140 thousand dollars, an increase of 28.07% over the same period last year. Operating profit -2310 million yuan, an increase of 31.16% over the same period last year. Because of the reconciliation between the company and the litigation fee of 45 million yuan of the Shenzhen branch of Pudong Development Bank, the company's net profit has been profitable, and its net profit has been 6 million 139 thousand and 800 yuan for the whole year, an increase of 16.29% compared with the same period last year.

According to the analysis of experts, the price of wool in 2011 is likely to aggravate the oscillation, and the driving force of the rise still exists.

San Mao Pai Shen said that the company will take countermeasures from two aspects: on the one hand, starting from the management of raw material supply, pay close attention to the trend of Australian wool market and the changes of relevant economic data, grasp the first-hand information in a timely manner, use the fluctuation of wool prices, choose the right time to bargain, store up goods, refine specific measures, and stabilize procurement costs. On the other hand, we should further strengthen technological innovation, intensify the development of new products, strive to increase the added value of products and raise the level of profits. At the same time, we should strengthen market development, optimize customer structure, reduce circulation links, increase marketing efforts, and increase sales.

Increase raw material inventory

Textile enterprise capital turnover encountered difficulties

Whether it is extrusion order or insufficient stock of raw materials, will bring cash flow difficulties to the textile and garment enterprises that need a large amount of cash flow. At the same time, the sharp rise in cotton prices has caused great pressure on textile enterprises. Textile prices and cotton prices are not synchronized, causing some textile enterprises to cash in difficulties, leading directly to the textile enterprises not dare to quote, dare not receive large single long list, weakened the market competitiveness, exacerbated the risk of camp.

Huamao 2010 annual report shows that the company achieved operating income of 1 billion 955 million 781 thousand and 300 yuan, an increase of 23.73% over the previous year, operating profit of 438 million 325 thousand and 600 yuan, an increase of 483.49% over the previous year, a total profit of 468 million 582 thousand and 200 yuan, an increase of 490.61% over the previous year, a net profit of 360 million 31 thousand and 700 yuan, an increase of 406.40% over the previous year, a net asset yield 9.28%, an increase of 4.85 percentage points over the previous year, and a 0.572 per share earnings.

Although Huamao shares achieved a net profit of 360 million 31 thousand and 700 yuan in 2010, the net cash flow generated by the company's operating activities was -11376.60 million, mainly due to the large amount of cash paid for the purchase of raw cotton.

It is understood that the stock end of Huamao stock in 2010 increased by 82.3% over the beginning of the year. The main reasons were: first, the domestic cotton production decreased in 2010, and the price rose sharply, making the cost of raw cotton increased. Two, the company also increased the stock of raw cotton in order to ensure the normal operation of the company.

At the same time, Huamao shares also said that domestic cotton production was reduced and cotton resources were tight. In order to ensure the normal operation of production, the purchase amount of raw cotton was increased during the current period. Meanwhile, the price of raw cotton rose sharply and the volume of money increased to make the loan of liquid capital increase correspondingly. The annual report shows that in 2010, the company's short-term borrowing rose by 43.03% over the beginning of the year.