Dawson International Plc today (9 August) warned higher cashmere raw material prices are reducing margins in its knitwear businesses, and that the biggest hit is likely to take place in its US knitwear operations.

The forecast came as the company reported results for the 15 months to 2 April, including an additional first calendar quarter which is seasonally loss-making for the group. 

In this additional first quarter, continuing operations saw sales fall to GBP1.6m from GBP2.6m last year. Its operating loss widened to GBP1.7m from GBP1.5m.

The pre-exceptional operating profit from continuing operations for the 15-month period was GBP0.1m. This compares with a pre-exceptional operating profit of GBP2.9m for the 12 month period to 2 January 2010.

Both the UK and US knitwear businesses performed well, returning operating profits of GBP0.7m and GBP2.3m respectively.

"These results were achieved against a background of rapidly escalating cashmere prices which increased by around 40% in 2010 and a further 20% in the first part of 2011," said chairman David Bolton.