JUNE GARMENTS EXPORTS ADJUST TO PRICE & INVENTORY

MOVEMENTS

June garments exports adjusted to price and inventory movements in major markets resulting in a
flat performance vs. same period year-ago.

While product off-take at point-of-sale continues to grow at a rate of +6% year-to-date as of May
in the United States as forecasted, the product and market mix of the Philippine garment export
business adjusted to inventory and price ending at $256 million in June vs. $257 million same
month last year.

Year-to-date, Philippine garment exports is now $1.35 billion vs. same-period year-ago of $1.39
billion continuing arrest of its decline rate last month at a steady –3%.

The business however, sustains its growth in the EU market at +33% in June and +28% year-to-
date. June exports to EU was $44 million vs. $33 million same month last year. Year-to-date, EU
exports is now $224 million vs. $175 million same period last year. June is the sixth consecutive
month that EU exports have been growing at double digit rates as the industry’s transformation
plan continues to succeed in expanding customer base and product mix in the European market.

In product terms, June apparel exports held steady at –1.7% decline while non-apparel and textile
exports continued their growth at +10% and +1.23% respectively.

June exports are representative of inventory and price adjustments as most of our global brands
customers end their fiscal years and/or align their inventory holdings consistent with financial and
revenue projections entering the second half of the year.

Our industry transformation plan has skewed our business towards major brands whose off-take
performance obviously dictate our production and export business. Gap was reported to have
grown retail sales in April by +7% in the United States. Liz Claiborne reported a +2.5% growth in
the first quarter. Ann Taylor grew by +4.2% in the same period. And Polo Ralph Lauren reported
+20% growth in sales but only +4.5% growth in profits.

These modest growths resulted in prudent production requirements from our manufacturing base
explaining why our exports were practically flat in June.

The continued growth of apparel consumer purchase in our major markets however, the shift to
fall and winter styles covering our succeeding export orders at naturally higher FOB values, and
the rapid changes taking place in our local industries business models, indicate that garments
exports will recover its marginal deficit and end the year at par vs. last year as forecasted.

The industry transformation plan is changing the landscape of our business to sustain our market
share and preserve jobs despite intense competitive pressures.

Continuing improvements in the implementation of the Barangay Micro-business Enterprise Law

is enabling small-scale operations in our manufacturing base capture sales through financial
efficiencies.

Investments of over P1.4 billion pesos made by more than 200 local firms through quota
incentivization are resulting in sustained sales.
Social compliance and skills-upgrading programs in the transformation plan availed by more than
500 firms in an on-going basis are significantly contributing to expanding business particularly in
Europe, Canada and Japan.

Progress of trade negotiations with new markets in ASEAN and Japan are building catch basins
for expected fall-out business to China.

But most importantly, the continued growth of the consumer markets where the Philippines
competes and the strong partnership between the private sector and government are positive
indications that the garments export industry transformation plan is achieving its goals of
sustaining growth and preserving jobs.

Garments and Textile Export Board. (July 15, 2004).June Garments Exports Adjust to
Price & Inventory Movements. Retrieved July 21, 2005 from the World Wide Web:
http://www.gteb.gov.ph/news/04/june_exports.htm