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SEARDEL TRYING TO LESSEN RELIANCE ON GARMENTS

Clothing and textile conglomerate Seardel says It Is trying to break its dependence on the garment industry.

The group said on Friday that its headline loss for the half-year to September fell to ii.3c from 23.4c previously. Its diluted headline loss per share was 1O.8c from a loss of 23.4c. Headline earnings per share from continuing operations were O.lc per share versus a prior headline loss from continuing operations of 0.2c.

Revenue rose 10.4% to RL2-bil- lion but there was an attributable loss of R71-mlllion from a R222- million loss. Profit on continuing operations was R2.5-million from a Rio-million loss the year before.

Seardel said that its fixed-cost business units focused on producbig textiles for the declining garment industry faced challenges.

The performance of the group’s textile operations continued to improve, with most business units profitable or well on their way to becoming profitable.

Continuing textile operations delivered an operating proflt of R8-mIllIon, compared with a R3-million loss previously.

Seardel’s clothing operations remained problematic with the continuing operations delivering an operating loss of R22-million, from a prior profit of R18-million.

“The loss is after accounting for a R7.5-million loss from the contract to supply official Fifa apparel.

“This contract proved to be disappointing, with retail and consumer demand being well below expectations,” the group said.

Critical clothing-sector problems included a strong rand, which was “of major concern to the local clothing industry”. With little protection from logistics costs, the local industry competed directly with imports in dollar terms.

“Hence a 35% strengthening of the rand, which is what we have seen In the past 18 months, means a 35% increase In all rand-based costs, such as salaries, wages and rentals. This Increase is over and above our own inflationary increases and cannot be passed on to the customer, who has the Imported product as an alternative,” Seardel said.

Though the local garment industry was protected by 45% Import duties, this protection was greatly diminished by garments arriving in stores without duties having been paid or subjected to reduced duties through value under-declaration.

“This scourge not only robs the local industry of many thousands of jobs but … costs the South African taxpayer over R25-billion in lost tax revenue.”

To eliminate this will require more stringent policing and harsher penalties, the group said. The list of fabrics and trims subject to import duties was too wide and resulted in imported fabrics and trims being 22% more expensive than those of International competitors.

Source: The Times – INet Bridge