Clothing and textile firm Seardel is set to report a decline in profits during the year ended March, reflecting persistence of harsh market conditions despite government subsidies.
Seardel is on a turnaround path after it was badly hurt by cheap imports, mainly from China. An intervention by the Department of Trade and Industry to save the broader local clothing and textile industry promised to stabilise the operation.
This intervention came about the time Seardel earned a new major shareholder, the investment arm of trade union, South African Clothing and Textile Workers Union. The union made the investment partly motivated by a social objective of saving jobs and is committed to return the operation to sustainable profitability.
JSE-listed Seardel announced yesterday that basic earnings per share were expected to come in between 4c and 8c compared to 19.47c recorded in 2012. This decline largely reflects normalisation of earnings after the group’s income statement was positively and significantly impacted by an extraordinary item last year.
The 2012 extraordinary item resulted from a settlement with former directors which brought R191m into the income statement. This caused the 2012 income attributable to ordinary shareholders to rise to R136,9m from R8.6m in 2011.
The absence of that extraordinary item in the year ended March 2013, will therefore see the group return to normalised recovery stage. Headline earnings are expected to come in at between 2c and 6c compared to 20.86c in 2012.
The group did post a normalised comparative base for its 2013 and 2012 earnings.
“Seardel accordingly believes that the following adjusted basic earnings and adjusted headline earnings per share numbers which excludes the once-off effect of the settlement are more appropriate measurements on which to judge the underlying business performance.
It said basic earnings per share of between 4c and 8c for the year ended March 2013 should be compared to a loss of 7.79c of 2012.
In addition to clothing and textile manufacturing operations, Seardel runs a sizeable industrial property portfolio which houses its operations and also accommodates other tenants. The group also distributes toys, electronics and branded apparel.
Source: The New Age – Sibonelo Radebe