Pittards reports pre-tax losses
British leather producer, Pittards PLC, has issued its final financial report for the full fiscal year ended December 31, 2004. The company that supplies leather for brands such as Nike, adidas, Coach, Dunhill, and Vuitton, recorded a pre-tax loss of £5.5 million compared with profits of £1 million for the previous financial year. The company attributed the poor results to a depressed leather market and the weakness of the
Sales turnover for the year was £73.2m, a fall of 17% compared with 2003 (£85.4 million), and although the company stated that the average sterling price per foot was virtually unchanged compared with the previous year’s, the depreciation of the US$ dollar was broadly offset by dollar price increases, and by changes in the mix of business.
The company’s Raw Materials Division ceased the production of sheepskin pelts at its Langholm factory on October 8, 2004. The sale of the factory for £0.12m was completed on December 17, 2004. The Division's loss for the year, including the costs associated with the closure, was £1.7m and has been shown separately as ' discontinued' in the accompanying financial statements.
In the Glove Leather Division, the sterling value of turnover in the year fell by 13%, and the underlying volume by 10%. Strong growth was said to have been achieved in sales to the military and service sectors, based on the introduction of technically advanced Custom Image Generation leathers, and also to the golf market based on new product introductions with Titleist FootJoy. However, the loss in volume sales of leather for dress gloves, baseball batters' gloves and for comfort shoes more than offset the achievements as the Division reported that it lost ground to competitors due to the weakness of the US$.
The Shoe and Leathergoods Division suffered an 11% drop in turnover compared with 2003, with finished leather sales volumes down by 22%. The volume shortfall arose mainly in the leisure footwear sector where two significant customers - one European and one Asian - undertook substantial destocking exercises at different stages during the year. Sales to the sports footwear and leather goods sectors survived, but the company said that some sacrifices were made and margins had to be cut.
“The international market for leather has remained depressed during the second half of the year, and the weakness of the US dollar continues. During 2004 we have suffered the costs of restructuring the business, and closing the loss making Raw Materials Division. The benefits from ongoing cost savings and efficiency improvements and from our investment in IT will be felt in 2005. The international market for leather is not expected to recover before the second quarter. However, with the exports still increasing, with a lower cost base far more in line with current level of demand and with strong growth in areas of new product introductions, the Company is better placed to make progress in the first half of 2005," commented Pittards’ chairman, Stephen Boyd.
