UK leathermaker predicts lower profits due to Foot and Mouth Disease
The UK leathermaker Pittards last week announced that it was expecting a ‘substantial reduction’ in Group profit before tax for the current financial year - the main reason being the increased cost of hides entailed by the present UK foot and mouth disease crisis.
Speaking to leatherbiz.com last week, the Group Financial Director of Pittards, John Buckley, said: " Usually, we source around 50% of our hides in the UK. Though domestically - produced hides are still available, the supply is restricted and we are having to pay over 30% more for our hides than before the outbreak. We are
supplementing the shortfall in supply by increased purchases from more expensive, non-UK sources. These factors are bound to impact on our bottom line for the year "
Mr Buckley said the situation was especially galling for the leathermaking trade because the demand for leather is so strong.
"Our turnover is comfortably ahead of the level it was at this time last year, and all the signs are that the demand for leather is going to go on increasing, so yes, you could say that the situation is somewhat ironic," said Buckley.
"Before the crisis hit, we had been expecting a softening in hides and skins prices, in line with other commodities, but of course all that is changed now – at least for the time being. On the plus side, we can at least take comfort from the fact that the situation is temporary, and that supplies will eventually return to something that resembles normality, but in the meantime it seems we have no choice but to go along with the price increases."
For the year 2000, Pittards reported an increase in pre-tax profit of 71% to £3 million ($4.3 million), on total sales of £80.2m. This was against the background of a world-wide increase in leather sales of 71% during the same period.
The Pittards announcement came in a week when statistics issued by the UK government’s Ministry of Agriculture, Farms and Fisheries (MAFF) suggested that the crisis had reached its peak and that the government’s slaughtering programme was taking effect. Though on average 30 new cases (farms) were still being confirmed every day, the incidence of the disease was markedly down on the fifty outbreaks that were being reported every day during the last week in March. By last Thursday (April 12) 1140 cases had been confirmed in the UK since the epidemic began.
