CONFINDUSTRIA MODA
ITALIAN TEXTILES CLOSED 2018 EXCEEDING EXPECTATIONS OF LAST FEBRUARY IN TERMS OF SALES
ITALIAN TEXTILES CLOSED 2018 EXCEEDING EXPECTATIONS OF LAST FEBRUARY IN TERMS OF SALES (+0.8% AGAINST -0.3%). TRADE BALANCE EXCEEDS EURO 2.4 BILLION, THANKS TO A SIGNIFICANT REDUCTION IN IMPORTS (-5.7%). IN THE FIRST QUARTER OF 2019, BOTH MANUFACTURING (-3.5%) AND EXPORTS (-2.3%) DECREASED, DESPITE THE EXCELLENT PERFORMANCE OF SALES TO THE UNITED STATES (+15.5%) AND THE REASSURING TREND OF CHINA (+3.2%), WHICH, HOWEVER, ARE NOT SUFFICIENT TO COMPENSATE THE NEGATIVE VALUE OF GERMANY (-18.0%)
The industry’s trade balance in 2018
Made-in-Italy textiles (including wool, cotton and silk fabrics and knits), after bucking the trend in 2017, closed 2018 with still positive results: sales were up +0.8%, reaching euro 7,947 million. Last February’s cautious estimates, released on the occasion of the past edition of Milano Unica, at a time in which the global worsening of the economic situation led to a -0.3% projected estimate for year end, proved wrong. This performance averages very differentiated results in each of the segments included in the analysis, as better illustrated below.
Textiles continue to play a key role in the Italian Textiles-Fashion industry, making for 14.5% in total sales (see Figure 1); the incidence soars to 38.8% if we only consider the “upstream” part of the supply chain.
As to textiles, the predominating segment is still wool, making for 42.7% of total sales. Second comes cotton (18.5%), followed by knits (17.5%), silk (17.3%) and linen (3.9%).
In terms of average performance of textiles in 2018, sales of wool fabrics were up, showing a +4.0% increase, as was silk, showing a growth trend again (+2.1%) after three years characterized by a negative sign, and linen, which proved particularly dynamic (+6.7%). Conversely, cotton fabrics and knits decreased by -4.6% and -3.0%, respectively.
In 2018, production value (which projections by Confindustria Moda’s Research Center calculate separately, considering the value of total sales net of the contribution deriving from the sale of imported products) shows a dynamic trend equal to +0.3%.
The domestic market, estimated by the ‘apparent consumption’ projections, after the substantial aligment in 2017, dropped by -2.4%. Once again, this is an average of the very different results obtained in each individual segment. Wool, silk and linen all bucked the trend, recording a positive performance in the domestic market. Juxtaposed against a more significant reduction in imports of semi-finished products, Made-in-Italy textiles, often used for the production of finished garments destined to export, managed to keep their visibility. In 2018, the performance of trade “from” and “to” Italy is not particularly satisfactory. In the twelve months, overall exports decreased by -0.2%. This variation led to foreign sales that only slightly exceed euro 4,310 million. Concurrently, imports fell substantially (-5.7%), recording euro 1,889 million.
Given the aforementioned trade performance, the trade balance for the industry showed an improvement, i.e. euro 105 million more than in 2017, exceeding euro 2.4 billion. The surplus in textiles accounts for 24.8% of the total sales generated by the Textiles-Apparel segment (equal to slightly less than euro 9.8 billion).
In 2018, the geographic breakdown, as illustrated in Figure 2, shows negative results both with the EU and extra-EU countries, even if with different levels, both for exports and imports; the only exception being increased sales of textiles in the extra-EU markets.
In particular, EU markets were down 10.0% in imports on an annual basis and -4.0% in exports. Extra-EU markets reduced imports by -4.2%, while exports increased by +1.9% (in this respect, it should be noted that, as specified in the Note at the bottom of Figure 2, only fabrics with at least 50% of natural fiber are considered, thus excluding mixed fabrics or synthetics, which leads to a discrepancy in relation to the figures reported in Table 1).
As for employment, in 2018 the industry experienced job reductions, especially in the silk and cotton segments. However, based on the results of the Confindustria Moda survey for SMI, the wool segment, included in the panel, confirmed a positive employment rate in 2018, similarly to 2017.
Made-in-Italy textiles in the first months of 2019
For Made-in-Italy textiles 2019 started with dropping exports and also domestic manufacturing showed an equally negative trend.
According to ISTAT data on manufacturing (adjusted for calendar effects), woven fabrics in the January-March 2019 period showed a decrease equal to -3.5%, following the sharp reduction (-8.3%) recorded in the fourth quarter of 2018. Knits too, recorded a downtrend with a -6.5% reduction in the first quarter of 2019, continuing the bearish trend already registered since the second quarter of 2018. As illustrated in Figure 3, the framework of Made-in-Italy textiles is rather complex, with total Textiles manufacturing down -7.3% overall in the first quarter of 2019, worse than only woven fabrics.
Examining the trade data more closely, we see that exports of textiles dropped by -2.3%, worsening the figure reported in the same period of 2018, which closed at -0.4%. Concurrently, imports also fell at a similar rate, showing a -2.4% reduction. Conversely, in the January-March period, the Textiles-Apparel industry recorded growth both in exports (+2.4%) and imports (+3.3%), driven by Apparel-Fashion. In fact, while the overall Textiles industry remains steady in terms of exports (0.0%), the “downstream” section was up +3.5%; similarly, the “upstream” section closed the first three months of 2019 at +0.9% in terms of imports and the Apparel-Fashion segment at +4.9%.
However, as it may be expected, the average overall result of textiles includes very different performances of the individual segments considered in this analysis, i.e. knits and the woven fabrics with at least 50% of natural fiber (see Figure 2 Note 1).
In the first place, exports of wool fabrics changed sign with a negative performance equal to -2.4%; more in detail, however, there is a dichotomy in the trend of worsted fabrics, up +4.1%, and that of combed fabrics, down -4.7%. In terms of volume, exports of wool fabrics fell by -9.6% (i.e. -3.2% in worsted fabrics and -14.5% in combed fabrics). Exports of pure silk fabrics showed a slight growth (+0.8% in value, +3.5% in volume), while exports of linen fabrics rose by +9.5% (+8.7% in volume). Exports of cotton semi-finished products dropped by -4.2% both in value and in volume. Lastly, knits were down -2.6% (but recorded a +0.7% increase in terms of volume).
As for imports, wool fabrics dropped by -2.7%, but in this case worsted fabrics plummeted by over -17.0%, while combed wool fabrics recorded a +0.5% variation. Imports of knits decreased by -3.3%. Imports of cotton were down -3.9%, while linen was up +5.0%. Pure silk also grew by +3.6%.
Given the aforementioned results, in the January-March 2019 period, the trade balance of Made-in-Italy textiles as a whole exceeded euro 423.9 million, down by nearly euro 9.5 million compared to the corresponding figure recorded in 2018.
The analysis of exports from a geographic perspective in the three first months of 2019 shows dropping sales both within the EU and outside the EU. Exports to EU markets decreased by -3.8%, while exports to extra-EU markets marked a -0.7% reduction. In the January-March 2019 period, imports, characterized by a high concentration in the extra-EU universe in terms of geographic breakdown (68.0%), also recorded a reduction in both areas: -1.3% from EU markets and -2.9% from extra-EU markets.
Apart from the average results by macro-area, it is also important to analyze the performance of the individual countries that represent the main commercial partners of Italian textile manufacturers (see Figure 4.2), which show peculiar and often divergent trends.
As to the main markets, Germany registered a particularly significant reduction (-18.0%); this performance goes across all the segments analyzed. It should however be noted that in the first quarter of 2018, the growth rate totaled +9.2%. France, which is the second export market for Italian manufacturers, limited the fall to -0.5%, while Romania was down -7.9%. However, there are EU markets that performed positively: Spain (+11.1%), Portugal (+18.5%) and the UK (+13.7%).
As to extra-EU markets, exports to the United States surged (+15.5%), thanks to the majority of the textiles considered in this analysis, except for pure silk. Exports to China grew by +3.2%, while Hong Kong dropped by -9.2%; despite this, if we sum up China and Hong Kong, the result would be euro 72 million, in line, therefore, with Germany. Also in the Far East, Japan recorded a +5.6% increase, Vietnam (albeit for limited quantities) +28.5%. Closer extra-EU markets, like Tunisia and Turkey, were down approximately -15.0% each. The analysis of imports shows that China and Turkey, first and second suppliers to Italy, recorded an increase of +2.8% for the first and a decrease of -12.2% for the second. China supplies 27.2% of the fabrics imported to Italy and Turkey 18.8%. Third place, though significantly detached, is held by Pakistan, with a positive variation equal to +12.6%. Imports from the Czech Republic and Spain were down -1.8% and -20.2%, respectively, while imports from Germany and Romania were up +9.7% and +8.1%, respectively.
Apart from these still incomplete figures relating to 2019, Milano Unica will serve as a barometer of the market, assessing market conditions and the short-to-medium term outlook for the industry. Thanks to the feedback collected from the main players/buyers in the industry, it will be possible to formulate projections on the evolution of Italian textiles in the upcoming months.
Milan, July 9, 2019
Publication by Confindustria Moda
This publication (hereinafter the “Document”) is an exclusive and original draft prepared by Confindustria Moda in favor of Federazione Tessile e Moda – SMI (on behalf of Tessile & Moda Service – Sole Proprietorship). Confindustria Moda is committed to carrying out numerous activities to promote the interests of businesses operating in the reference industries. This Document, developed for SI.TEX SpA, is meant to be circulated by mail, both email and ordinary mail, and may not be re-distributed, reproduced, published or changed in any of its parts by subjects not explicitly authorized. All copyrights are reserved. This Document is exclusively intended to provide information and does not contain any offer or request to carry out any transaction. The information, opinions, evaluations and projections included herein were obtained or derived from sources that Confindustria Moda considers reliable, but they do not represent any guarantee, either implicit or explicit, and therefore Confindustria Moda and Federazione Tessile e Moda shall in no event be held liable.
