Nextil will focus on its knitting facility activity in Guatemala from March 2024. Credit: Shutterstock.

Nextil Group’s sale of Elastic Fabrics of America Inc. in North Carolina is expected to generate approximately €3.2m in capital gains and help optimise its operational structure and focus on key growth areas.

This follows a new growth initiative the company implemented in 2023 to improve profitability as it revealed a drop in earnings in 2022, weighed down by increased costs.

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Nextil said at the time its full-year earnings were affected by the increases in raw material, transport and energy prices that had been plaguing the industry the previous year due to a complicated international context.

The divestment of Elastic Fabrics of America aligns with the company’s broader financial strategy of ensuring enhanced financial flexibility and sustainability.

Under the mutually agreed terms with the buyer, Nextil will continue its operations in the sold facilities until March 2024.

Following this transitional period, the company will begin production in Guatemala.

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The divestment is said to mark the culmination of Nextil’s strategic objective to consolidate its industrial knitting activities in Guatemala, in which the company has already invested over €12m.

Nextil explained it has “state-of-the-art” industrial facilities dedicated to its activities in Guatemala that will allow the development of its industrial activity more quickly and efficiently and with lower costs.

In June last year (2023) Nextil set up a manufacturing facility to offer “Made in Italy” garments to Italian and French luxury brands, which it said was a prerequisite required by most operators in this field.

The plant started operating under the label Nextil Luxury and was responsible for Nextil’s end-to-end production process in Italy. The company said the factory once fully operational, would have the capacity to produce 2,000 garments per month during the first year. 

The manufacturer added that all of Nextil’s activity in Italy would be completed with a commercial network distributed across the country.