Lamont shares slide as results announced

Shares in Northern Ireland textile group Lamont Holdings fell by 18.2 per cent to 22.5p sterling, after it announced a pre-tax loss of £7.3 million sterling (€11.4 million) in the six months to June 30th, 1999. The shares later recovered 1p to 23.5p but are a mere shadow of the 325p high reached in 1996.

Losses are set to continue in the second six months but at a lower level. "Trading conditions are expected to remain difficult for the rest of the year," said the chairman, Mr Frank Cushnahan. "The continuing disappointing sales volume means that we are not yet generating acceptable returns from the recent capital investment programme which has resulted in an annual depreciation charge of approximately £7 million."

Since the half-year, order books have increased across all the group's operations but sales are still insufficient to result in a return to profits. As a result, no interim dividend is being paid.

"Our plans for next year anticipate an improvement in trading and indications are that this will begin to show through before the end of the year".

He also stressed the need for the balance sheet to be as strong as possible "especially during the current difficult market conditions" and said a major disposal would reduce the net debt now standing at £28 million, giving a high gearing of 70 per cent.

Its strategy may involve the disposal of certain business activities which are deemed non-core to its target markets. It has already received an approach for its non-woven operation.

The latest losses, Mr Cushnahan said, reflected difficult trading conditions in its markets. Also, the capital investment programme undertaken in the last two years resulted in commissioning difficulties, which led to a fall in group sales from £42.1 million to £33.6 million. These problems had now been overcome.

A breakdown in the sales shows a fall in fabrics and fabric printing from £30.7 million to £24.0 million. A loss of £4.95 million was incurred compared with a profit of £600,000. Carpets and carpet yarns didn't do any better with a drop in sales from £11.3 million to £9.6 million and a loss of £800,000, contrasting with a profit of £790,000.

Reviewing fabrics and fabric printing, Mr Cushnahan said a number of Alexander Drew's major customers experienced financial difficulties which hit volumes at its Rochdale plant.

However, there have had been "positive developments" in the past three months as the customer base has been broadened and a major contract was received.

Moygashel Furnishing has refocused its business towards contract, upholstery, manufacturing and a narrower concentration within the British retail market. BFF Non-woven has also "resolved the manufacturing difficulties" and continuing developments are expected to lead to increased profitability.