Knitwear and home furnishings group Dawson International Plc has reiterated its warning that higher cashmere and cotton costs are set to weigh on its performance in the coming year – with with US knitwear customers indicating they will cut their orders.
The comments came today (1 March) after the firm said its operating profits in the six months to 1 January fell by two-thirds as higher raw material prices cut into margins.
Pre-exceptional operating profit from continuing businesses fell 64% to GBP0.8m (US$1.3m) from GBP2.2m in the same period last year. And operating profit after exceptional items fell to GBP1.1m from GBP2.0m last time.
However, Dawson, which is issuing a second half year report after moving its accounting year from the end of December to 31 March, said revenues for the 12 months rose 1.5% to GBP65.7m from GBP64.7m in 2009.
Commenting on the half year results, chairman, David Bolton said: "The upward trend in raw material prices continues to impact our businesses as we move through 2011.
"It is therefore important to ensure that selling prices recognise the increase in costs and we are also offering customers alternative products."
He said some private label customers in the US have already indicated they will significantly scale back their knitwear purchases in the coming year.