Global Textile Report

Global Textile Report

What to Watch?

  • Lasting deflationary pressures (commodities, consumer prices) deteriorating Textile and Clothing (T&C) sales in 2016, forecasted at -1% after -4% in 2015
  • China move towards a service economy to result in a changing supply chain landscape, at the benefit of South East Asian countries
  • Two major topics – technical textile and sustainable production – not tackled again in 2016 with -1% Capital Expenditures (CapEx). 

Textile Sector Value:
467bn USD

Textile Sector Risk Rating

Sector-Risk-sensitive
Last reviewed: 02/02/16

Textile id card

Fragmentation
Fragmentation-4 
Internationalization
Internationalisation-2 
Capital Intensity
Capital-intensity-2 
Profitability
Profitability-1 

Sector risk map: Textile

Outlook undermined by turmoil in emerging markets

Textile and Clothing nominal sales ceded -4% in 2015 and were crippled by unusually low commodity prices (cotton -15%, wool -7%, and manmade fibers 1%) and multiple currency depreciations worldwide, particularly in emerging markets. As the latter produce about 80% of global output, poor economic prospects in Brazil and Russia and China’s shift towards services will continue to weigh on the sector. Gross output would hence decrease by -1% in 2016. 
However, the financial shape of T&C companies has improved between 2011 and 2015: net debt now represents only 53% of equity. This 5ppts improvement over the period must be taken with agrain of salt, as it is mostly attributable to fewer investments than to strengthening equity. As CapEx is forecast to decrease by -1%, financial structures shouldn’t deteriorate in 2016.
Looking forward, demand will be fueled by population growth (+500mn inhabitants by 2020) and higher incomes that will substantially increase household purchasing power. GDP per capita is expected to keep rising, increasing by +4% annually between 2015 and 2020.
​Key Players

Country

Role

Sector Risk

China #1 Producer
#1 Exporter
Dot-Risk-Medium
Italy #2 Producer
#2 Exporter 
Dot-Risk-sensitive
India #3 Producer
#3 Exporter
Dot-Risk-medium

Strengths

  • Resilient long-term demand thanks to rising middle classes in emerging markets
  • Steadier supply cost thanks to higher resort to manmade fibers, whose prices are less volatile than those of cotton or wool

Weaknesses

  • Profitability undermined by volatile raw material prices and rising wages
  • Fierce competition weighing on margins and further stressed by e-commerce activities
  • Changing consumer behavior (e.g. fast fashion) forcing T&C to become more flexible

Textile Subsectors Insights

Textile: -15% in cotton prices in 2015 has not prevented fabric producers to be swayed by manmade fibers. Synthetic output is making up cotton production
Clothing and Footwear: Manufacturers should benefit from improved profits thanks to lower raw material costs while real production is forecasted to increase by +5% per year on average by 2018
                 

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