GLOBAL warming has joined the long list of woes afflicting Scottish knitwear group Dawson
International.
The company issued a fresh profits warning yesterday and announced 320 job losses in the US following a slump in sales of thermal underwear in North America. The market has collapsed as a result of the mildest winter on record, forcing Dawson's local subsidiary to cut back production still further.
But the group's UK factories, which make quality knitwear such as Pringle pullovers and Ballantyne Cash-
mere shawls, will escape the axe on this
occasion.
The shares, which have tumbled steadily during the past year, lurched 2.5p lower to close at 10p yesterday as the company forecast a loss of #11m for 1998 and cancelled its final dividend.
Only three months ago, Dawson was still predicting it would break even before exceptional charges for factory closures, redundancies and stock write downs.
These one-off charges will now knock #20.5m off the bottom line to produce a total loss of #31.5m. The latest cutbacks in the US will result in a hit of #6.4m.
Dawson's US subsidiary
Morgan announced the closure of three sewing plants in July with the loss of 400 jobs. Now a further 320 jobs will go with the closure of a fourth sewing plant and
the abolition of a shift at
Morgan's main factory in Hometown, Pennsylvania.
But for the time being there will be no further cutbacks in Britain, where Dawson has already shed 720 jobs this year.
Finance director Paul Munn said: ''There is nothing planned
at the moment. We have already acted quickly and aggressively
(in the UK).''
The Pringle factory in Berwick on Tweed and the Laidlaw & Fairgrieve plant in Galashiels have both been closed to cut costs in the face of declining export sales.
Dawson still has a 2200-strong workforce in Scotland and remains a major employer in the Borders.
But the long-term future is not bright. The company said its UK-based businesses ''continue to be adversely affected by the strength of sterling, the continuing weakness in the important Asian markets and the sharp downturn in the clothing retail sector in the UK''.
Like other textile firms under pressure to cut costs, Dawson is taking more of its garment manufacturing to Third World countries.
The stitching work it once carried out in the US is being switched to Honduras and El Salvador. And much of the cashmere processing once done in Britain has been transfered to China.
Munn said this year's cutbacks should reduce costs by ''at least 10%'' and allow Dawson to return to profitability in 1999. But he warned there was little prospect
of an early revival of the company's main markets.
Chief executive Peter Forrest was more upbeat however, saying cost reductions being forced through would enable it ''to exploit any upturn in consumer trading''.
Dawson's one consolation is its relatively low level of debt. Munn said it would end the year with debts of around #34m, equivalent to 30% of shareholder funds.
He said the troubled company, which put itself up for sale earlier this year and then took itself off the market, was still determined to pursue an independent future.
He blamed former chairman Derek Finlay and Dawson's merchant bank adviser Schroders for handling the sale process badly.
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