LONDON (CNI)--The strength of sterling continues to undermine results at Courtaulds which Wednesday reported first half pre-tax profits of £62m ($104m), nearly 5% lower than the same period last year, on sales 6% down at just over £1bn.
Chief executive Gordon Campbell said the currency impact on translating overseas profits cost £6m and an estimated £10m was lost on transactions compared to the same period last year. "This was particularly acute in fibres and chemicals where our major manufacturing facilities are located in sterling and dollar areas," he explained.
Operating profits for the fibres and chemicals division fell 7% to £25m on sales down 12% at £388m. At constant exchange rates profits would have been 4% lower, while sales would have been down 5%
Tencel sales continued to be positive at the retail level, with indications that next year's spring and summer season will be substantially ahead of this year. However, the company admitted that fibre sales were lower than the first half of 1996 due to poor denim demand, a weak Japanese consumer market and excessive ordering last year.
Courtaulds said completion of its new UK production plant has been delayed due to construction difficulties and commissioning will not now start until spring 1998. However, it said this should not impair long term plans for Tencel expansion.
Overall group net borrowings increased from £320m at 31 March to £430m at 30 September, with an accompanying increase in gearing from 46% to 59%.