HONG KONG: Quota Pressures Impact On Novel Denim
Fabric maker Novel Denim Holdings Limited has cut its second quarter net losses to $0.6 million from a loss of $1.5 million in the same period last year, but said its business has been adversely affected by customers shifting orders in anticipation of the release of quota in January 2005.
In a statement on Tuesday the company also said its second quarter income included a profit of $1.3 million from its garment and fabric operations in Mauritius, which have now been discontinued.
Excluding this figure, net loss from continuing operations was $1.9 million in the second quarter to 30 September 2004 versus a net loss of $0.9 million in the same period last year.
Mr KC Chao, president and chief executive officer, said: "During the last few months the company has repaid a portion of bank borrowing out of disposal proceeds from its Mauritian assets, with approximately $5 million of fixed assets currently remaining for sale."
For the second quarter the firm, which makes denim, chino, twill and printed fabrics, said net sales increased by 43 per cent to $16.8 million, from $11.7 million for the same quarter last year.
Chao added that: "South African business continued to be adversely affected by strong local currencies and use of above-market cotton inventories."
Looking ahead, the company says it plans to continue evaluating cost reduction options in its South African operations.
It expects to report net sales of approximately $20 million and a net loss of approximately $0.5 million in the third quarter ended 31 December 2004.
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