Fabric firm weaves year-end profit

By Dita De Boni

Diversification and a strengthened economy paid off to weave Auckland-based Designer Textiles' ominous first half into a positive full-year result.

Although well below forecasts first made in mid-1998, Designer reported a profit of $2.4 million before abnormals for the year ended June - up 25 per cent from last year - on sales of $44.2 million.

While turnover rose 20 per cent, managing director Kerry Harding said a delayed shipment of fabric in June left sales $500,000 short of what they might have been.

Mr Harding said the company's fortunes picked up in the second half of the year when New Zealand's economic difficulties eased and the company's Australian fabric-dying plant, bought in 1997 for $5 million, finally started to turn a profit after "harder than expected conditions in that country."

He said the company was planning to continue diversifying out of its staple swimwear fabric business and pursue a larger portion of the Australian fashion textile market, although no new acquisitions were being singled out.

In New Zealand, Mr Harding said potential growth would come from newly acquired upholstery-fabric manufacturer Mollers Textiles.

"Disregarding Mollers, we are looking to grow our international sales from 54 per cent to 60 per cent, but Mollers will give us a chance to grow in New Zealand as well as spreading our risk and not depending so much on the volatile clothing trade," he said.

Mr Harding declined to give a forecast for Mollers' performance in the coming year, but said the company had performed "on target" in the first few months under Designer.

The company declared a final dividend of 2c to bring the total dividend for the year to 3c, the same as the previous year.

Designer Textiles shares were the top risers on the stock exchange yesterday, up 4c to 35c.