News blog
Dawson International
- BY: Andrew Hore |
- POSTED: 01/03/2011 |
Cashmere knitwear and furnishings supplier Dawson International says that figures for its 2010 financial year were held back by rising cashmere and cotton prices and things are not getting any better.
One pound of cotton used to cost 74.5 cents early last year but it now costs 178 cents. This is the first time that cotton has risen above $1/lb since 1994.
Cashmere prices have risen from $80/kilo in mid-2009 to $140/kilo now.
Revenues from ongoing businesses edged up from £64.7m to £65.7m the previous year. The branded home furnishings business revenues dropped from £8.18m to £1.17m and there will be no more this year. The underlying pre-tax profit fell from £1.75m to £740,000.
All the continuing operations reported lower profits, or in the case of private label home furnishings a bigger loss. There were also higher pensions costs.
On the bright side, there was a net exceptional credit. A further £1.6m was paid by King Deer, which is slowly paying off money owed to Dawson, and this offset reorganisation and environmental costs.
Dawson needs to try and pass on price increases to remain profitable but that won’t be easy. Retail buyers may decide to buy alternatives to cashmere products if they become too expensive. US knitwear sales are likely to be much lower in 2011. Overall costs are being reduced.
The year end is being changed to March and the current quarter is always loss-making.
Dawson had net cash of £11.6m at the end of its 2010 financial year. There was a further £1m of King Deer’s payment received after the year end. That is the high point for the year, though, and it dips into its borrowing facilities in July, August and September.
Dawson also has pension concerns. The IAS 19 pension deficit has fallen by £6.9m to £12.3m but Dawson is still paying out £1.5m each year to reduce the deficit.
It is not as if the pensioners get all of that money. The government’s pension levy takes £600,000 and admin and adviser fees consume a further £500,000. That leaves the pensioners with £400,000 of the cash.
Dawson wants to do something about this but it has not managed to agree anything with the pension fund’s trustees.
At 1.5p a share, Dawson is valued at £3.38m.
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