16th Jan 2014 12:01
LONDON (Alliance News) - Leeds Group PLC said Thursday it had swung to a profit in the first half of its financial year after the previous year was hit by a writedown, but it remained cautious about its outlook despite a 14% rise in sales.
The fabric importer, which operates through a German subsidiary and its Chinese unit, reported a GBP650,000 net profit for the six months to November 30, 2013, after reporting a GBP166,000 net loss for the same period last year when it wrote off its entire GBP745,000 investment in Dawson International PLC. Dawson went into administration in August 2012.
Leeds Group's revenue for the six month period was GBP18.5 million, up from GBP16.2 million a year earlier. Sales were up 8% in local currency terms.
Revenue at Hemmers Europe, the German trading subsidiary, was up 12% to GBP16.4 million. Trading conditions were similar to previous years, with sales volumes up 3.8% to 6.4 million metres, it said. Hemmers' pretax profit rose to GBP840,000, from GBP697,000.
External sales volumes and revenues in local currency were up 48% and 22%, respectively, at Hemmers' China subsidiary, ChinohTex. The firm said the sales growth can be attributed to a successful entry into the Mexican market, accounting for a quarter of all sales in the period. Pretax profit slightly dropped, to GBP188,000 from GBP189,000, due to staff costs.
Still the firm, which was founded over 100 years ago as a textile processor, was cautious about its outlook.
"Despite the improved performance in the first half of the current financial year, the economic environment in many of the markets in which the group operates remains fragile," Chairman Kathryn Davenport said.
"Sales in the seasonally quiet month of December were broadly in line with the expectations of the Board and as we approach the traditionally busy first quarter of the New Year our order books are much as they were at this time last year. Nevertheless the seasonal nature of our businesses has led in recent years to first half profits running somewhat ahead of those of the second half," she added.
Leeds Group further cut its net debt to GBP112,000 at November 30, down from GBP1 million a year earlier and down from GBP390,000 at the end of 2013.
Still, the company won't be paying a dividend as it retains funds for potential investments. It said it was looking to make investments in businesses where they have expertise, but they may not be operating in the textile industry.
Shares in Leeds Group were trading up 11.79% at 32 pence per share Thursday morning, one of the biggest risers on the London market.
By Alice Attwood; [email protected]; @AliceAtAlliance
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