Indonesia textile giants are still posting a solid performance in the first quarter, amid the economic slowdown caused by the COVID-19 pandemic. Thanks to the escalating demand for cloth masks and personal protective equipment (PPE) which enable publicly-listed garment manufacturers like PT Sri Rejeki Isman (SRIL) and PT Pan Brothers (PBRX) to maintain their operations.
Sritex’s sales and profit remained the same year-on-year, with total sales of $316 million and $28 million in profit. The export segment remained the main driver, with a total contribution of 59.74%. Geographically, Sritex’s exporting market still dominated by the Asian market (35.13%), followed by the European market (9.14%).
However, according to the company’s recent information disclosure, Sritex would possibly book a decline in the export market for the next quarter due to temporary closure or reduced working hours. “We have anticipated this by producing masks and PPE, which are currently in very high demand. We also increase the working hours of the relevant departments,” said the company in a statement.
Meanwhile, Pan Brothers’ business also remain unchanged in Q1 as orders from the existing clients were based on last year’s contract. “We pay attention to the next quarter as there is a global decrease in demand,” Anne Patricia Sutanto told Forbes Indonesia. She adds, the company expects a decrease of 10% from the export market for the next quarters.
Furthermore, as the National Disaster Mitigation Agency (BNPB) appointed Pan Brothers to be the official suppliers for PPE, the company has produced one million cloth masks per day, 100,000 units of disposable PPE and 30,000 washable hazmats per week. Pan Brothers expected masks and PPE production to contribute 15% of the total sales.
According to the rating agency, Fitch Ratings, Pan Brothers may survive the downturn caused by the coronavirus pandemic, as the company can cater the increasing orders for PPE to provide some sales buffer for the next six to nine months.
Fitch expects the pandemic-related impact on sales in the global consumer discretionary sector, including apparel, to be significant due to the temporary closure of retail stores in "non-essential" categories. “We believe the impact should be less for larger multinational apparel brands with strong customer brand loyalty and a wide range of price points within their portfolios, such as Uniqlo and Adidas - two of Pan Brothers' top customers. This should reduce demand volatility during this period,” stated Fitch Ratings in a recent report. The agency also believes these global brands tend to have a strong omnichannel presence, which should partially offset the effect from the temporary closures of some of their physical stores.