10/19/2016

GlobalTextileIndustryReport|EconomicResearch

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GLOBAL TEXTILE REPORT

WHAT TO WATCH?
Lastingdeflationarypressures
(commodities,consumerprices)
deterioratingTextileandClothing(T&C)
salesin2016,forecastedat1%after4%
in2015

TEXTILESECTORVALUE:
467BNUSD
TextileSectorRisk
Rating

Chinamovetowardsaserviceeconomyto
resultinachangingsupplychainlandscape,
atthebenefitofSouthEastAsiancountries
Twomajortopicstechnicaltextileand
sustainableproductionnottackledagainin
2016with1%CapitalExpenditures
(CapEx).

TEXTILEID CARD

GlobalTextileReport

Lastreviewed:02/02/16

Fragmentation

Internationalization

CapitalIntensity

Profitability

OUTLOOK UNDERMINED BY TURMOIL IN EMERGING MARKETS

TextileandClothingnominalsalesceded4%in2015andwerecrippledbyunusuallylow
commodity prices (cotton 15%, wool 7%, and manmade fibers 1%) and multiple
currencydepreciationsworldwide,particularlyinemergingmarkets.Asthelatterproduce
about 80% of global output, poor economic prospects in Brazil and Russia and Chinas
shift towards services will continue to weigh on the sector. Gross output would hence
decreaseby1%in2016.
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
mustbetakenwithagrainofsalt,asitismostlyattributabletofewerinvestmentsthanto
strengthening equity. As CapEx is forecast to decrease by 1%, financial structures
shouldntdeterioratein2016.
Looking forward, demand will be fueled by population growth (+500mn inhabitants by
2020) and higher incomes that will substantially increase household purchasing power.
GDPpercapitaisexpectedtokeeprising,increasingby+4%annuallybetween2015and
2020.

KEY PLAYERS
COUNTRY

ROLE

SECTOR RISK

#1Producer
#1Exporter

#2Producer
#2Exporter

#3Producer
#3Exporter

http://www.eulerhermes.com/economicresearch/sectorrisks/GlobalTextileReport/Pages/default.aspx

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10/19/2016

GlobalTextileIndustryReport|EconomicResearch

STRENGTHS

WEAKNESSES

Resilientlongtermdemandthanksto
risingmiddleclassesinemerging
markets

Profitabilityunderminedbyvolatileraw
materialpricesandrisingwages
Fiercecompetitionweighingonmargins
andfurtherstressedbyecommerce
activities

Steadiersupplycostthanksto
higherresorttomanmadefibers,whose
pricesarelessvolatilethanthoseof
cottonorwool

Changingconsumerbehavior(e.g.fast
fashion)forcingT&Ctobecomemore
flexible

TEXTILE SUBSECTORS INSIGHTS

Textile:15%incottonpricesin2015hasnotpreventedfabricproducerstobeswayed
bymanmadefibers.Syntheticoutputismakingupcottonproduction
Clothing and Footwear: Manufacturers should benefit from improved profits thanks to
lowerrawmaterialcostswhilerealproductionisforecastedtoincreaseby+5%peryear
onaverageby2018

RECENT SECTOR RISK CHANGES

Vietnam
(Q42015)

Turkey
(Q42015)

Spain
(Q22015)

GLOBAL REPORT

INDUSTRY REPORTS

GlobalTextileReportFeb16

Italy
Germany

GLOBAL SECTOR REPORTS

Aeronautics

Agrifood

Automotive

Chemicals

Construction

Energy

Household
Equipment

Information&
Communication

Machinery&
Equipment

Metal

Textile

Transportation

Technologies

Paper

Pharmaceuticals

Retail

http://www.eulerhermes.com/economicresearch/sectorrisks/GlobalTextileReport/Pages/default.aspx

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