Hyosung pumps $53 mn into Turkey spandex factory expansion

South Korea's textile maker Hyosung TNC Corporation has invested 60 billion won ($52.8 million) to expand its spandex production facility in Cerkezkoy, an industrial zone in Turkey, according to the company on Nov. 2.

Hyosung already has a factory in Cerkezkoy that handles 25,000 tons of spandex production annually, but it isn't enough to meet the recent surge in orders. The newly constructed factory will handle 15,000 tons, bumping the Turkey-based spandex production to near 40,000 tons. The new factory will begin running next July.

Hyosung TNC holds the No. 1 position in the global spandex market with 33% market share. Its global production capacity is around 140,000 tons annually. In addition to Turkey, the company operates factories in China, India, Vietnam and Brazil. 

Earlier this year, Hyosung could not even consider expansion as it was hard enough to keep the existing factories running. The global coronavirus crisis had caused a steep decline in clothing demand, prompting Hyosung to halt some of its factory operations and produce a bare minimum.

In the second quarter, Hyosung TNC posted an operating loss of 8.2 billion won ($7.2 million).

But the tables turned in the second half of the year as clothing manufacturers resumed production and spandex orders began to soar. Hyosung TNC could not handle all of the orders that came in, even with factories in full operation.

The rise in spandex orders is owing to people spending more time at home amid stay-at-home guidelines and a preference for comfortable clothing. Spandex's elasticity has made it a favorite for many consumers.

Amid the surge in spandex orders, Chinese manufacturers had to scale down export shipments because of their focus on the domestic market. As global fashion manufacturers placed most of their orders with Hyosung, group Chairman Cho Hyun-joon saw this as a valuable opportunity.

According to Chairman Cho : “We need to boost our market dominance in Europe's premium market starting with Turkey as it is the production base for European customers. Also, we must solidify our leading market position by further increasing the gap with our competitors."

Industry watchers expect Hyosung's additional factory to improve the company's performance. 

Hyosung TNC was able to swing back to profit in the third quarter of this year, posting 66.1 billion won in operating profit, an earnings surprise far exceeding market consensus. 

Kiwoom Securities, a local securities firm, presented a positive outlook for the company, saying that it expects Hyosung TNC to post over 100 billion won in quarterly operating profits from the first half of next year.


Write to Jae-kwang Ahn at ahnjk@hankyung.com
Danbee Lee edited this article.