Vicunha to double installed capacity in indigo production

14 Sep '10

5 min read

Vicunha Têxtil, leading producer of indigo and denim in Latin America, registered a consolidated net profit of BRL 40.2 million in the first semester of 2010, a significant improvement if compared with the same period in 2009, when the company registered a net loss of BRL 226,3 million.

From January to June this year, in the indigo and denim segment, the net income reached BRL 380,7 million, a growth of approximately 21% (BRL 315.5 million) over the same months of last year, and ended the semester with an EBITDA of 22%,, totaling BRL 83 million - an increase of five percentage points compared to the same period last year (BRL 53.1 million).

The return of Vicunha Têxtil to profitability is a consequence of the strategy outlined in 2009 and consolidated in the recent months, of focusing the company's businesses exclusively on the manufacture of indigo and denim textiles. Besides the sale of assets in the meshes segment, held last year, the company stopped operating this year in the polyester and viscose fiber segments.

“These operations were the result of important management decisions in Vicunha, being crucial for the resumption of the company's profitability. Our main objective today is to consolidate the company through investment in international operations and the modernization of national factories," says José Maurício D'Isep, CFO and Investor Relations Director of Vicunha Têxtil.

Vicunha's good results in 2010 are also reflected in the reduction of net debt of BRL 491 million registered in the end of 2009 to BRL 291 million at the end of the first half. Part of the settled debt is due to the contribution of 37.5% of the total capital of Textile, Vicunha Têxtil's controller, by BTG Pactual, through the Investment Fund (FIP) Nala.

Investments
The positive numbers for the period come from Vicunha's attitude in to strengthen in the segment both nationally and internationally. To achieve this goal, important actions are being put into practice, such as:

- Total investment projection of BRL 240 million over three years to modernize the national factories in the Northeast Brazil (two in Ceará and one in Rio Grande do Norte); out of this amount, BRL 90 million will be applied this year, focusing on the updating of machinery and processes and maintenance of the demand for manpower and current staff.

- During the period, the company consolidated its international operation to make the LA International factory, located in Ecuador, a subsidiary of Vicunha Têxtil. Over the next two years, the plant will receive investments of USD 25 million to double the installed capacity in the production of indigo. The focus is to bet on a mix of premium products that can meet the domestic market and, especially, Latin America and Europe.

- Signing of a Letter of Intent with the government of Mato Grosso State and the prefecture of Cuiabá for the installation of industries of activities such as spinning, dyeing, weaving, and finishing, aimed towards the processing and production of fabric. The investment projected is of BRL 350 million, expected to generate two thousand direct and six thousand indirect jobs, annual processing of 65,000 tons of cotton, and annual production of 72 million linear meters of fabric.