Dawson group's seasonal nature leads to half-year losses

TEXTILES group Dawson International blamed the seasonality of its business after posting half year losses.

The Scottish firm, which is almost 29 per cent owned by Yorkshire's Leeds Group, made an operating loss before exceptional items of 3.4m in the six months to July 3, compared to 3.1m the previous year, and an operating loss after exceptional items of 2.7m.

Dawson said it expects its traditionally seasonally stronger second half performance to reverse the first half loss but said that its full year results are expected to be lower than last year due to increased commodity prices.

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It saw turnover fall from 23.2m to 20.3m, which it said was due to the exit from its home furnishings business Home Furnishings Branded.

The move came after it sold its Todd & Duncan textile business to a key supplier last year.

Chairman David Bolton said: "Trading in the first half of the year reflects the seasonality of our businesses and the phased exit from Home Furnishings Branded, which was completed during the period.

"The pre-exceptional operating loss for the first half has widened despite an improvement in underlying sales and a reduction of losses in Home Furnishings Branded.

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"While we expect to reverse the loss in the second half we anticipate that pre-exceptional operating profits for the full year will be lower than last year due to increased commodity prices which cannot be fully passed on in the current economic climate." He added: "Significant progress has been made in the past year through the disposal of Todd & Duncan and the exit from Home Furnishings Branded, which has greatly improved the financial position of the group. Actions are being taken to preserve and improve that financial stability.

"Given the current economic environment we intend to further reduce the cost base and ensure our organisational structure is efficient and responsive."

Turnover in the group's knitwear division in the first half of the year was 2.7m, down from 2.9m the previous year and the operating loss 400,000 compared to 100,000.

The company said sales and margins in this division for the full year are expected to be lower than the last two years as a result of increased cashmere prices, ongoing uncertainty in the global economy and its effect on consumer confidence.

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The group's net pension liability at June 2010 was 19.2m compared to 19.3m at December 2009 and 6.3m at June 2009.

Mr Bolton added: "Dialogue with the Pensions Trustee will continue during the second half of 2010."

Shares closed down 16 per cent at 1.77p.

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