Clothing maker Novel Denim Holdings Ltd on Thursday warned it expects a worse-than-expected first quarter loss of 67-70 cents a diluted share due to rising air cargo costs and reduced garment production efficiencies.

The Hong Kong-based company, which has factories in China, South Africa and Mauritius, had originally forecast a loss of 22 cents a share which included costs linked to the axing of several plants in Madagascar.

In a statement, Novel Denim said first quarter sales are expected to climb around 10 per cent to $41 million from $37.2 m in the year-ago period.

Company president and CEO, KC Chao, said: "While we underestimated the margin impact of the production disruption, we feel comfortable with our expected results in the later half of the year and next fiscal year given certain management and production changes, expanding customer base and a strong order book."