Bulgaria’s Largest Textile Companies: Slight Recovery after Weak Years

Bulgaria’s Largest Textile Companies: Slight Recovery after Weak Years

In 2022, the combined revenue of the top 25 companies in the sector increased by 19%.

Main takeaways
  • For another year, these three companies lead the ranking: Italian-owned companies E. Miroglio and Zalli, and Bulgarian Kalinel.
  • Material and labor costs increased significantly, contributing to part of the revenue growth, but quantities have also risen.
  • For some, 2023 has been better, but reduced consumption and bankruptcies of German fashion companies are a problem for others.

In 2022, the total revenue of the 25 largest clothing and textile companies grew by 19.3% year-on-year, exceeding 1.858 billion levs (949.8 million euro). Six companies had lower sales than the previous year, four continued to operate at a loss, albeit a narrower one, while Lempriere Wool again swung to loss.

To sum it up, there has been a slight recovery in the sector after a few weak years. However, the ongoing trend is for the clothing and textile industry to shrink, mainly due to rising labor costs. A fresh example is Israeli-owned Delta Textile, which closed its Bulgarian factory in Ruse and moved production operations to Turkey. Last year, Stara Zagora-based yarn manufacturer Embul Investment also closed down.

"2022 was a very good year; we saw strong interest towards Bulgarian clothing and textile manufacturers, leading to an increase in orders. In practice, companies could barely meet all client demands. The upswing is a result of increased demand following the COVID-19 pandemic. Additionally, Western clients needed time to reestablish their connections with suppliers from the Far East and traditionally turned to our region. We also noted that individual orders decreased in favor of orders with more models," commented Radina Bankova, Chair of the Bulgarian Association of Clothing and Textile Producers and Exporters and CEO of Lovech-based Kris Fashion Industries.

Top 3 Leaders Hold Positions

For another year, there was no change in the top three - Italian-owned companies E. Miroglio and Zalli and Bulgarian Kalinel are once again in the lead.

The traditional leader in the sector ranking, E. Miroglio, saw a 38% rise in sales in 2022, reaching 335 million levs. Italian businessman Edoardo Miroglio is the largest foreign investor in the sector.

"The increase in revenues in 2022 is a result of higher selling prices and increased production volume. In 2022, we invested 11 million levs in machinery and equipment. Some of the funds were invested in photovoltaic centers at our production sites in Sliven and Yambol. We continue with investments this year, which will be no smaller than last year's. We are looking for new clients and labor force, including from abroad," the company told Capital Weekly in response for a request for comment.

Today, Edoardo Miroglio owns seven textile factories in Sliven, three in Yambol, and one in Svishtov. The group also owns a dyeing workshop in Italy and two plants in the Serbian cities of Pirot and Dimitrovgrad. E. Miroglio owns companies in Georgia and France, as well as joint ventures in China, Italy, and Bulgaria. After a deal with Greek owners, the company acquired the fashion brand DiKa, under which clothes are sold in company stores in the country and abroad. Edoardo Miroglio is also the owner of a hotel, a winery, and vineyards in the village of Elenovo near Nova Zagora, as well as several office buildings in Sofia.

Revenues of nearly 210 million levs for 2022 once again position the Gabrovo-based Zalli in second place. A subsidiary of Italian company Calzedonia, it is number 1 in terms of profitability in the sector ranking for 2022. The Bulgarian company has three production sites in Gabrovo manufacturing women's and men's underwear, T-shirts, blouses, leggings, and other items under the brands Intimissimi, Tezenis, Calzedonia, Falconeri, Atelie Eme.

For the third consecutive year, Troyan-based Kalinel is in the top 3 of the sector ranking. The company's revenues grew by 15.84% in 2022, exceeding 163 million levs. Kalinel produces pillows, blankets, mattress covers, and other items. It is one of the largest European companies for home textiles and one of the largest and long-standing suppliers of Sweden's IKEA. Kalinel's main factory and administration are located in Troyan, but the company owns production sites in Cherven Bryag and Teteven, as well as in Serbia's Vranje. Three-quarters of its output are intended for the Swedish corporation, with the remainder going to international retail chains such as Metro, Kaufland, Aldi, Yus, Tesco, Lidl, and others.

"2022 was challenging for Kalinel. We expected to return to normal working conditions, and to some extent we did, but due to the unstable financial situation, demand for some items was lower than before the pandemic. The hyper-demand that benefited our industry during the pandemic has subsided. War, inflation, and an energy crisis became the most commonly used words of the year. Markets - both for materials and finished products - have changed significantly; nevertheless, we report growth in turnover," Kalinel manager Kateryna Radevska commented in an interview with Capital Weekly.

For 2023 Kalinel has planned investments primarily focused on the automation or robotization of production processes and increasing the capacity of some of the existing lines. The company is also exploring options for green energy production.

More Foreign Investors

Until recently, the largest sock manufacturer in the country, Delta Textile - Bulgaria, held the fourth position in the annual sector ranking. However, in March 2023, the company announced that it was closing its factory in Ruse and relocating production to Turkey. Only the distribution center will remain in the city. The decision was made by the owner, Israel's textile group Delta Galil Industries.

"A year and a half ago, we were working at full capacity. After COVID, the economic crisis was strongly felt across the entire market. Our main client had accumulated stocks, and demand decreased by 40-50%. The management assessed the market and decided to close the factory in Bulgaria and keep the one in Turkey. The assessment was based on the economic situation in Bulgaria, which is less favorable compared to Turkey due to a chronic labor shortage, expensive energy, and raw materials coming from Turkey," Igal Heretz, general manager of the Bulgarian company, told Capital Weekly.

Südwolle Group Italy Bulsafil Branch ranks fifth in top 25 in the sector. The company was Italian-owned until October 2015 when parent company Safil sold its business to Germany's Südwolle. The Bulgarian subsidiary recorded a rise in revenue of nearly 42% year-on-year in 2022. Sales exceeded 158.1 million levs, but the company continued to operate at a loss (-1.785 million levs), albeit smaller than in 2021. In Bulgaria, the corporation owns a factory for carding of long-fiber wool in Skutare, Maritsa Municipality.

Sliven-based Lemprierе Wool (6) reported single-digit sales growth in 2022. The company is part of Australia-headquartered group of the same name and is engaged in processing raw wool and manufacturing wool products. According to company data, production at the plant is fully mechanized, with human labor only used for machine setup and maintenance and for moving bales of processed wool from one machine to another.

Since June of this year, Indorama Ventures Lifestyle Bulgaria (7th place) has been the new name of Nova Zagora-based Sinterama. The company is engaged in the industrial processing of textile fibers through twisting and also does subcontracting work for clients. The local company started its activities in 2012 when Sinterama Italy acquired the shares of Torchitura Nova Zagora from Italy's Miroglio owned by the Miroglio family.

Today, the company operates in rented buildings owned by Miroglio. Its revenues grew more than 16% in 2022, exceeding 86 million levs, and the company swung to profit after reporting a loss for the previous year.

Carpet and textile flooring manufacturer Milat Carpet Bulgaria in Sliven (8) is owned by Turkey's Milat Hali. The Bulgarian company reported a 31% decrease in sales in 2022.

Ruse-based BTB Bulgaria, owned by German national Achim Bayerl and Kalinka Petkova Kirova, ranks 9th with a turnover of 78 million levs. It achieved the highest revenue growth rate among the top 15 for the sector, of 88.82%. The company produces women's clothing for global fashion giants such as Comma, s.Oliver (Women), Hallhuber (Donna), Esprit, Peek & Cloppenburg, Oui, among others. It also produces its own collections of women's clothing under Vayana brand and has a branch in North Macedonia.

Sofia-based Balkantex ranks 11th among the sector's top 25. The company is owned by Switzerland Cross Fashion and manufactures clothing for Esprit, s. Oliver, Migroc, Marc O'Polo, Tommy Hilfiger, Tom Tailor, as well as the Swiss army and postal service. The Bulgarian company has its own design team and clothing constructors and collaborates with subcontracting factories. Revenues grew by over 47% last year, exceeding 53.7 million levs, but the company continued to operate at a loss, albeit lower compared to 2021.

Bulgarian Companies

A nearly 20% growth in revenues in 2022 to over 65.6 million levs places Burgas-based joint stock company Yana in 10th place in top 25. The company, owned by Orlin Ivanov and Marin Marinov, has two production facilities - one in Pleven for knitted products (sweaters, fabrics) and one in Panagyurishte for linen products (towels, bathrobes, fabrics), as well as its own warehouses and stores.

Revenues of 50.4 million levs in 2022 put family company Aglika Trade in 12th place in the sector ranking. The company is the successor to the former state-owned textile plant Petko Vladov in Tvurditsa, privatized in 1996 by then-director Petko Petkov. In 2012, the family business expanded with a new factory, Aglika Trade, in Veliko Tarnovo. Today, this is a group of factories located on 40,000 square meters of land, interconnected but with different industrial lines and technologies for linen products.

Aglika Trade also owns a furniture factory. "The enterprise is taking its first steps, but our ambitions are big because we have set ourselves the goal of producing collections made from recycled textile waste generated by the other three factories for bed linen, linen products, and blankets. In this way, we aim to completely close the production cycle with a focus on environmental protection. Many engineering tests on the recycled material and its durability over time are needed. We hope that EU programs will be opened so that we can continue to advance in this direction," explained the commercial director of Aglika Trade, Elitsa Petkova.

Gabrovo-based Mak, the successor to one of the oldest textile factories in Bulgaria established in 1912, comes 14th in Capital's ranking. Today, Mak is a publicly traded company with 844 shareholders (6 legal entities and 838 individuals), controlled by the Bizhevs family Georgi, Dimitar, and Dilyana. The company's portfolio consists of over 400 products. Mak manufactures various types of cotton yarns and fabrics (including reflective, antibacterial, and non-flammable ones), owns dyeing and printing production lines, and produces ready-made clothing from the fabrics it manufactures-medical, hotel, workwear, as well as military, police, and firefighter uniforms. It also offers backpacks, sleeping bags, umbrellas, overalls, and armored vests and has its own design department.

In 2022, the company invested in a new gas installation and a liquefied petroleum gas (propane-butane) tank to reduce its dependence on natural gas, its activity report shows. New machines were put into operation, increasing production capacity and flexibility, as well as the quality of products. The construction of a logistics center and the company's own photovoltaic power plant with an installed capacity of 0.3 MW also began last year.

Sales at Pleven-based Dimitrov company (15) exceeded 32.6 million levs in 2022, marking a 21.4% increase. Magdalen Simeonov Dimitrov and members of his family are partners in the company which specializes in the production of men's clothing. It partners with brands such as Hugo Boss, G.A. Operations, and Creation Gross, and also has its own brands - Desizo Monni Milano, and Monni. The company operates in three production buildings. According to its activity report, "the risk in the sector is high due to the increased competition in the subcontracting market for sewing."

Burgas-based Kush Moda (11) reports a 13.8% decrease in revenues to less than 29 million levs for last year. The company has factories in the villages of Trunak and Yabulchevo, Ruen municipality. It produces knitwear and is among the main partners of Sweden's H&M, with 53.5% of its revenues coming from this client, as evident from the activity report. The company also works for Bestseller A/S, Kappahl Sverige, Vila AS, and others. For 2023, it plans to increase the capacity of the two photovoltaic plants at its production bases. The partners in the company are Hasan Jan, Fatme Ali Kush and Zeyneb Nezhdet Kush.

Apolon-95 in Gorna Oryahovitsa (17), saw its sales grow by more than 27% in 2022. The company, in sole ownership of Dimitar Borisov Dimitrov, manufactures men's suits for global designer brands and also has its own brand, Apolon.

A decrease in sales for 2022 was reported by Haskovo-based Yanev (18), a producer of everyday men's and women's clothing. The company's revenues exceeded 23.7 million levs last year, which is 24.5% less than in 2021. The sole owner of the company's capital is Yanko Ivanov Yanev.

On 19th position is Sofia-based company GMT, in which Teodora Tsenkova, Georgi Vanchev, and Mirena Raycheva are partners. The company produces custom-made women's and men's clothing using about 70 subcontracting companies and imports sewing machines for the clothing industry.

Now, What's Next?

In general, the expectations of companies in the sector for this year are not particularly optimistic. "2023 started very well but turned out to be stressful due to the many bankruptcies in Germany, which is one of the main partners of Bulgarian sewing and textile companies, as well as for the country as a whole," Radina Bankova of the Association of Clothing and Textile Producers commented for Capital Weekly.

"Major players in the market declared insolvency. Among them is Peek & Cloppenburg, which outsourced a large part of its orders to the Far East, but its bankruptcy affected the market's atmosphere. A key client like the K-mail Order (Klingel group) declared bankruptcy in May, and it owns 11 leading brands in online sales and catalog trading without physical stores. Many Bulgarian companies had contracts with this company and are still waiting for their payments. Another major client, Gerry Weber, which was in a restructuring procedure, also declared bankruptcy. All of this is a result of the decline in clothing sales due to high costs of living. Warehouses are full of inventory, customers cannot sell or pay," said Bankova. "The situation means a very tough financial landing for Bulgarian companies that are subcontractors of orders. In practice, some foreign customers are being bailed out on the back of their suppliers and demonstrate extremely unfair behavior. Their problems are quickly transferred to us because we have an open economy and are therefore overly dependent on foreign order-placing clients."

Pirin-Tex also notes a cooling of the euphoria that dominated the markets in 2022. "Customers are much more cautious when placing orders due to the large stockpiles accumulated over the past 12 months. The reduced consumer activity in Western Europe due to increased costs of basic goods and services, as well as general economic uncertainty, play a major role in this," the company commented for Capital Weekly.

According to Elitsa Petkova of Aglika Trade, the lack of specialized engineering professionals and even operators in production is deepening. At the same time, there is a "serious imbalance between the requested monthly salary and labor efficiency," she notes.

Main takeaways
  • For another year, these three companies lead the ranking: Italian-owned companies E. Miroglio and Zalli, and Bulgarian Kalinel.
  • Material and labor costs increased significantly, contributing to part of the revenue growth, but quantities have also risen.
  • For some, 2023 has been better, but reduced consumption and bankruptcies of German fashion companies are a problem for others.

In 2022, the total revenue of the 25 largest clothing and textile companies grew by 19.3% year-on-year, exceeding 1.858 billion levs (949.8 million euro). Six companies had lower sales than the previous year, four continued to operate at a loss, albeit a narrower one, while Lempriere Wool again swung to loss.

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