I am pleased to provide you with this summary of the main activities of our company during 2015.
The global economic slowdown that began in 2014 continued throughout 2015, owing to still-sluggish foreign demand and increasingly curbed growth in internal purchasing. Despite this global downturn, the Peruvian economy grew 3.26%, allowing the country to retain its leading position in Latin America. Within the region, Peru is one of the fastest-growing economies, drawing from its prudent macroeconomic policies and broad structural reforms agenda.
Within this context, total non-traditional exports decreased from US $11,677 million FOB in 2014 to US $10,807 million FOB in 2015, down -7.5%.
Meanwhile, total textile and garment exports declined -26.5%, from US $1,800 million FOB in 2014 to US $1,324 million FOB.
The GDP for the Peruvian textile industry fell 12.4% in textiles and 16.4% in garments from 2014 to 2015, largely due to imports of fabrics and garments from Asia, particularly India and China, at dumping prices.
During 2015, the company sold a total of 703,673 garments, of which 93,315 units were sold in the domestic market and 610,358 units were exports. This represents a 2.08% increase on 2014, in which the company sold a total of 689,703 units.
In 2015, sales totaled S/. 94,604 thousand, of which S/. 48,392 thousand were garment sales and S/. 46,212 thousand were textile sales. In 2014, total sales stood at S/. 81,474 thousand, comprising garment sales of S/. 37,392 thousand and textile sales of S/. 44,082 thousand.
The unit price of textiles per linear meter sold decreased from S/. 16.17 in 2014 to S/. 15.99 in 2015, while the unit price per garment climbed from S/. 54.27 to S/. 66.49 over the same period. This increase in unit price reflects both the appreciation of the US dollar and the company’s success in targeting higher-end customer segments, especially in respect to garments, which are manufactured for well-known international brands.
Lastly, foreign exchange losses of S/. 1,180 thousand were recorded on the conversion of foreign currencydenominated liabilities assumed by the company in 2015, following the devaluation of the Nuevo Sol against the US Dollar.
As a result of the circumstances outlined above, in 2015 Universal Textil recorded a commercial loss of S/. 8,957 thousand.
When adding deferred taxes under International Accounting Standard 12 (S/. 1,647 thousand) to the above-mentioned commercial loss, the net loss for the year comes to S/. 7,310 thousand. Offset by retained profits of S/. 2,691 thousand plus gains on asset sales of S/. 599 thousand, Universal Textil’s accumulated loss totaled S/. 4,020 thousand at the 2015 year end.
Although we posted strong sales of both textiles and garments despite the global economic slowdown, in 2015 Universal Textil incurred several nonrecurring expenses aimed at reducing our inventories and streamlining our manufacturing process. We undertook these commitments with the full certainty that the related expenses will be offset by significant future revenues, generated through greater plant efficiencies and higher gross margins.
In view of the foregoing and following prudent criteria, we believe it is appropriate to refrain from remunerating the members of our Board of Directors for their services during the year and from distributing any dividends to shareholders against 2015 results.
We thank you sincerely for understanding the reasons behind these measures.
In closing, I would like to express my sincere gratitude to all managers and employees of Universal Textil, as well as the sales agents distributing our products both in Peru and abroad, for their dedicated efforts in 2015. I encourage each and every member of the Universal Textil team to continue these best efforts, so that, by the end of the current financial year 2016, we will once again be able to present our shareholders with the strong profits we all desire.
Dionisio Romero Paoletti – Chairman
Lima, March 30, 2015