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SOUTH AFRICA: Apparel Exports Growing At More Than 38 Percent A Year

Published date:
Tuesday, 22 July 2003

Apparel exports had been growing at a rate of more than 38% a year for the past four years said Clothing Industry Export Council chairman Jack Kipling.

The latest manufacturing production figures from Statistics SA show that in the period March to May, one of the major contributors to the 0,9% fall in the index after seasonal adjustment was the 10,7% quarterly fall in total textile production and 11,1% fall in the total production of wearing apparel.

Customs and excise trade figures for May show that exports of textiles and textile articles rose to R505,7m from R488,3m in April but that from January to May exports had dropped 11% to R2,5bn from R2,8bn in the same period last year.

Recent trading updates from Woolworths Holdings, Truworths International and Edgars Consolidated Stores reflect buoyant sales of clothing and textiles which should translate into reports of solid profits from listed SA clothing and textile groups in the next few months.

In the past few years SA clothing companies have become increasingly export-focused but their results will also be affected by the strong rand.

Jack Kipling said that exports of apparel for the year to December 2002 were R2,7bn.

The biggest listed group that supplies clothing and textiles to the domestic market, as well as increasingly to the export market, is Seardel. Other listed clothing and textile manufacturers are Adonis, Burlington, Pals and Glodina.

Seardel reported a doubling of headline earnings in the six months to December on a 22% rise in revenue to R2,2bn.

The group is expected to report its year-end results in the next few weeks and Seardel chairman Aaron Searll said on Friday that turnover for the full year exceeded the R4bn mark for the first time, which was very pleasing.

"Turnover is vanity, profit is sanity and cash flow is reality," Searll quipped.

Most of the other listed groups have also delivered strong performances recently, usually off a low base.

Knitwear manufacturer Adonis, which serves only the domestic market with branded items, recently reported a near-trebling of headline earnings for the six months to March.

Burlington, which has been contracting its manufacturing activities in the past few years and now makes only knitwear, doubled headline earnings in the six months to December, reflecting strong retail demand.

Pals, which specialises in menswear and is exporting successfully, grew headline earnings by 50% in the same period.

Glodina, which was bought by German entrepreneur Claus Daun in late 2001, is currently undergoing restructuring but is gradually returning to profitability. It said in March its plans to grow exports would be threatened by the strong rand.

Searll said rand strength not only affected margins on exports but also meant that ready-made clothing, yarn and textiles could be imported at lower prices, which affected domestic activity.

Kipling said the volatility of the rand, in particular its present strength, would undoubtedly have a short-term effect on exports. But the clothing industry was always aware of this potential and professional companies had considered this in their strategic planning.

"All the leading forecasts point to a weakening of the currency over the longer term. An exchange rate of R9/1 puts the SA clothing industry into a good position on international markets. We do not require the rand to reach levels of above that in order to compete," he said.

SA clothing exporters were benefiting from, rather than being threatened by, the growth of clothing and apparel exports by other African countries that qualify for the Africa Growth and Opportunity Act (Agoa), which allows duty-free imports to the US on a specified range of goods.

There was a vast product range and each country had its own strengths. One of the good things to come from Agoa was increased co-operation among African countries, Kipling said.

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