• Plans to buy 50% of Ethiopian garment firm for $1.5m 
  • H1 loss deepens to $2.3m
  • Sales fall 6.5% to $48m
Bagir Group is to buy a 50% stake in Nazareth Garments Share Company

Bagir Group is to buy a 50% stake in Nazareth Garments Share Company

Formal wear tailoring firm Bagir Group has revealed plans to invest in an Ethiopian production facility, after recording a significantly deeper loss in the second quarter.

The company, which floated on London's Alternative Investment Market (AIM) in April, said it has signed a conditional agreement to purchase a 50% stake in Nazareth Garments Share Company for US$1.5m.

Nazareth owns a 9,000 square metre factory building and the 50,000 square metre plot on which the facility is located, employing 400 people. The facility manufactures trousers and formal shirts predominantly for the Ethiopian market.

Following completion of the deal, Bagir says the factory will undergo certain upgrades to enable the production of high quality trousers and jackets for export into the global market. This is expected to start in the first half of 2015.

As at July last year, Nazareth's revenues totalled around $900,000, and profit before tax of $200,000.

"Given the duty-free export environment from Ethiopia to the EU and US, the competitive costs, and the strong Ethiopian government support for the textile industry, Bagir anticipates this investment in Ethiopia will help create a stronger competitive advantage for the company," said CEO Danny Taragan.

The plans were revealed as the company said that during the six months to 30 June, Bagir's net loss amounted to $2.3m, compared to a loss of $401,000 in the same period of last year.

The company implemented a cost savings plan and started a comprehensive review of operating processes and strategic focus, designed to reduce costs, improve profitability and enhance its sales and marketing performance.

Revenues, meanwhile, fell 6.5% to $48m from $51.4m a year ago. Revenues from its UK operations were "broadly" flat at $26.6m.

Nonetheless, Bagir said its first-half results were "in line with expectations", and it continues to expect full-year revenue to reach $100m-102m and EBITDA to be between $4m and $5m.