Business Performance 2021

According to the statistics of VITAS, 2021 is an extremely difficult year for Vietnam's textile industry. The covid-19 outbreak began in the North and Ho Chi Minh City, then moved to the southern provinces, almost freezing business operations. Textile exports fell steadily in July, August, and September. Government Directives 15 and 16 on strict social distancing pushed companies to apply the "3 on-site" model, which was the only way to maintain and stabilize companies' production activities, despite the high abnormal expenses.

Everpia has overcome difficulties in orders, raw material pricing, and transportation thanks to its determination to efficiently implement the "dual goal" of disease prevention and production stability with the Government. The key focus was to ensure safe production during the pandemic to stabilize sales while increasing profit ratio.

Unit: mil.VND

Everpia ended the fiscal year 2021 with sales of VND 865.9 billion, a slight increase of 1.2% compared to 2020, profit of VND 59.7 billion, an impressive increase of 42.0%, accomplishing 81.7% and 79.6% of target sales and profit respectively as assigned by the General Meeting of Shareholders.

Unit: mil.VND

The COVID-19 pandemic has drastically shifted worldwide consumers's perspectives on values, behaviors, and comsumprion patterns, resulting in company transformation to align with new comsumer and business trends. To catch the trends, in 2021, Everpia continued to boost online business, improve the three-way connection among the website everon.com, POS software at continued to integrate the Subtainable Development Strategy into business and governance activities such as conducting reponsible business by using environmentally friendly materials, providing a solution to progress toward greener production, and integrating ESG in Strategy, Administration, and Operation to achieve sustainable development.

1. Bedding business

The Bedding business did have a positive beginning of the fiscal year 2021: i) The 2021-2022 collection with Ankara design and 100% natural fabric was highly rated by customers and agents with a 22% increase in total pre-order value over the previous collection, ii) the Summer exclusive collection with a minimalist style received high praise customers, becoming the best seller of the company's showroom system; iii) E-commerce website www.everon.com clearly depicted the change of consumer digitalization trend by increasing sales month over month.

However, Covid-19 struck for the fourth time in important commercial locations such as the North, Da Nang, and Ho Chi Minh City late April to mid-September, forcing 90% of the company's agents to be suspended for a long period of time or even closed. The strong recovery in the last three months of the year was only enough to increase domestic retail revenue by 0.9% over 2020.
 
For the hotel orders, the orientation to promote the offer of the combo Bedding and Curtains products for large hotel projects has contributed to positive revenue results for this industry in 2021 with a growth rate of 38.0% despite the state of stagnation and not daring to invest in new products or expand the operation of hotels and accommodation facilities when the pandemic broke out in the high tourism seasons and lasted until the holiday season at the end of the year.

In addition to revenue e-commerce platforms including Lazada, Shopee, and Tiki, online sales revenue the website www.everon.com increased by 19.5 percent over the same period in 2021. During the year, the company continued to install a POS software system, invest in software upgrades, and complete connecting gates so that agents can receive and process orders placed on the everon.com website, thereby boosting sales at each store. By the end of 2021, 80% of Hanoi agents had installed and employed Everpia's sales software in their daily sales activity.

Bedding exports in 2021 declined by 10.2% over the same period last year, due to the impact of supply chain disruptions, such as cancellations and delays in shipping, which resulted in high transportation costs and the inability to deliver produced goods to customers.
At the end of the fiscal year 2021, the total bedding sales reached VND 561.9 billion. In which, the proportion of revenue B2C - domestic retail, B2B - hotel orders, Online and Export segments was 66.1%, 14.9%, 7.4% and 11.6%, respectively.

Unit: mil.VND

Factory Innovation Program since 2019 with the most prominent initiatives including the reduction of some stages in the production process, rearranging the position of machinery assisted the Bedding workshop to saving a significant amount of production costs by reducing the number of workers at the workshop. Accordingly, compared to 2019, the number of workers at the Bedding workshop decreased by 83 people. Concurrently, measures to effectively employ resources and lower a portion of manufacturing costs were implemented, resulting in an increase in the bedding business's gross profit 28.4% to 33.9%. Despite the significant costs of "3 on-site" implementation, the gross profit ratio reached its peak in the period 2017-2021, affirming the Company's Board of Directors' commitment to achieving a profit after tax of at least 10% per year.

2. Padding business

The Padding business has two main activities: selling Padding products and Quilting. Quilting is a business with a low-profit ratio. Additionally, in the context that textile companies are increasingly equipped with quilting machines to manufacture products with simple quilting shapes, Everpia has decided to change the padding business development, specifically: focusing on padding production and sales, no longer accepting separate quilting orders, only accepting orders for both padding and quilting.

Besides, in keeping with the concept of "Sustainability as a Strategy”, Everpia has always strived to use sustainable materials as substitutes for regularly used materials. In 2021, the Company partially replaced the traditional fiber with Sorona fiber. Sorona's main ingredient is Bio-PDO, a polymer made through the fermentation of sugar extracted corn. The natural fermentation process reduces energy consumption by 40% and reduces greenhouse gas emissions by about 20% compared to using petroleum-based materials. With its softness, good heat resistance, breathability, and quick-drying, Sorona an ideal fiber for outdoor sportswear products.

At the end of the fiscal year 2021, the total revenue of the padding business reached VND 208.8 billion, of which the production and selling of finished products increased by 6.9% over the same period in 2020, quilting decreased by 17 .3% due to production downsizing.

Unit: mil.VND

Although revenue increased by 9.0% over the same period in 2021, due to the costs incurred to ensure safety against the pandemic and maintain production with “3 on-site”, the gross profit ratio of the padding business in 2021 declined 44.5% to 40.9%. The gross profit ratio of 40.9% is the highest profit performance in the padding business when compared with the biggest competitor’s current ratio of 16.2%. The reasons for this star rate are i) the company has a stable source of raw materials at the most competitive prices in the market, ii) a team of highly skilled workers who can fulfill orders high requirements on the complexity of the products, iii) the company can satisfy orders that require not only high quality but also production environment by possessing full global certificates of production and working environment management such as GRS - Certificate of Recycled Cotton, BSCI – Business Social Compliance Index.

3. Cleaner business

Among the three businesses, Cleaner was the business being affected the most by the supply chain disruption owing to the covid pandemic, and it generates 100% of its revenue through export. Customers canceled some of their orders, and the number of cleaners in new orders was reduced due to the constant cancellation of shipping lines and increasing delivert expenses, as well as the closure of some factories and shopping centers in Europe and the United States. At the end of the fiscal year 2021, the revenue of this business reached VND 76 billion, which decreased 21.1% over the same period.

After 3 years of officially merging into Everpia, a series of innovation initiatives to streamline production lines, reduce personnel in redundant stages, manage inventory effectively and efficiently, avoid wasting raw materials, and reduce fuel consumption have helped the industry's gross profit margin to improve. The Cleaner's gross profit margin increased to 20.7 percent, the highest level since the Cleaner business came into operation.

Unit: mil.VND

4. Other Products

In addition to the main businesses, revenue other products such as furniture, decorations, and kitchen wares contributed VND 19.3 bil, which accounted for 2.2% of the Company’s revenue structure in 2021.