A textile company in Ho Chi Minh City temporarily stops processing to reduce losses.

Leather Footwear and Garment Export Joint Stock Company (Legamex - stock code: LGM) has just announced its decision to temporarily suspend processing production from May to reduce losses and reduce financial pressure in the coming time.

The company said it will resume its outsourcing production activities when the domestic and world textile markets recover and the company's resources meet the prescribed conditions.

According to the introduction, Legamex is a member company in the system of Gia Dinh Textile and Garment Joint Stock Company, established in 1986, nearly 40 years ago. The predecessor is an export garment enterprise under the People's Committee of District 10 (HCMC), the company specializes in manufacturing leather shoes and garments for export to the Soviet Union and some other countries.

In 2005, Legamex officially became a joint stock company. LGM shares were first traded on UPCoM in 2019.

Difficulties came to Legamex when the company lost orders for fabric cabinets and suffered losses. In 2023, the company switched to a fashion garment manufacturing structure to adapt to the new situation.

Legamex temporarily stops processing to reduce losses (Photo: LGM).

However, by 2024, the business still faced difficulties, leading to unimproved productivity, revenue was only enough to partially offset the salaries and benefits of direct production workers, leading to negative gross profit.

The company believes that in 2024, the textile and garment industry will have a slight growth in exports but will require a lot of technical standards, raw materials, and resources to access. Legamex claims to be only a processing unit for domestic partners, so it does not have enough resources to produce and do business on an export scale.

Therefore, finding partners, orders and negotiating prices during this time is still difficult, most of the orders are small quantities, low unit prices, short production and delivery times, difficult to be effective. Therefore, production activities do not achieve the expected productivity and output.

The number of direct production workers has also continuously decreased due to difficulties in salary, bonuses and accompanying policies, and new recruitment has not been implemented as planned. At the end of 2024, the company had 202 employees, a decrease of 68 people compared to the beginning of the year.

At the end of 2024, Legamex had an accumulated loss of more than VND 166 billion, with negative equity of nearly VND 80 billion. The company had short-term financial debt of nearly VND 89 billion, nearly 5 times higher than at the beginning of the year.

Also in the garment industry, before Legamex, another enterprise, Garmex Saigon Joint Stock Company (stock code: GMC), also fell into a state of temporary suspension of production, generating no revenue due to lack of orders to operate.

Source: https://dantri.com.vn/kinh-doanh/mot-cong-ty-det-may-tai-tphcm-tam-dung-gia-cong-de-giam-lo-20250520153032900.htm