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H&M ’s Ethiopian Supplier Invests in Factory to Boost Revenue

Bloomberg Business
by William Davison
June 24,2015

Ethiopia’s Almeda Textiles, which sells clothes to Swedish fashion chain Hennes & Mauritz AB, plans to increase revenue by 50 percent to $30 million a year by 2018 by upgrading factory equipment and training staff.

The company will invest in its only plant near the city of Adwa, in Ethiopia’s northern Tigray region, Almeda’s General Manager Libelo Gebreselassie said in an interview on Monday. He declined to say how much will be spent. The company, which began operations in 1998, could supply Stockholm-based H&M with more than 4,000 t-shirts a day next year if productivity improves, he said.

“We’re upgrading our internal capacity,” Libelo said at Almeda’s offices in the capital, Addis Ababa. If the company can boost capacity and reliability at the plant, H&M may increase its orders, he said.

Almeda is owned by the Endowment Fund for the Rehabilitation of Tigray, a group of companies started in the mid-1990s by the Tigrayan People’s Liberation Front party that’s a founding member of Ethiopia’s ruling coalition. It’s been supplying H&M, Europe’s second biggest clothing retailer, since 2013.

H&M can’t comment on its relationship with Almeda for “competitive reasons,” spokeswoman Anna Eriksson said by e-mail on Tuesday.

Ethiopia’s government plans to invest about $1 billion a year in export-focused industrial parks that will contain textile factories among other manufacturing sites, Arkebe Oqubay, a special adviser to Prime Minister Hailemariam Desalegn, said last month. While Africa’s second most-populous nation has a target to earn $1 billion this year from textiles and clothing exports, it shipped only $70 million worth in the nine months through March, according to the Trade Ministry.

About 90 percent of Almeda’s dyed fabrics and garments are sold in Ethiopia, with large orders from the army and police force for uniforms, Libelo said. The company’s sales will probably be $20 million in the fiscal year ending July 7, up from annual revenue of about $15 million in the two previous years, he said.

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