Courtaulds shares dive on warning

Courtaulds Textiles saw its shares plunge yesterday as it warned of losses in the US and more redundancies at home in its second profits warning in little over four months. The textile group had pounds 47m wiped off its market value after the shares slid 45p to 373p following comments by the chairman, John Eccles, to the annual general meeting.

Mr Eccles said the weak trading conditions in the US reported at the full-year results announcement in February "have proved to be more severe and long-lasting than previously expected. Additionally, lace markets in continental Europe have been softer since the turn of the year". The result for the group's continuing businesses in the first half of 1996 is now likely to be "substantially" below that of the previous year, with the US business showing a small loss, he said.

Analysts were yesterday surprised by the scale of the impact, cutting full-year profit forecasts by between pounds 2m and pounds 7m to pounds 40m to pounds 42m. Courtaulds had warned in December that its US business was being hit by destocking after US retailers and lingerie manufacturers over-estimated consumer demand in the run-up to Christmas. In February, it said the problem was likely to continue until the end of March.

Chris Burbridge of UBS said: "I was not surprised by the style of the statement, but I was surprised by the degree. The company had made it quite clear that the States would be the problem, but the word 'substantial' had a fair old sting in it."

The US problems follow difficulties faced by Courtaulds Textiles and the rest of the industry last year after a sharp run-up in raw materials prices and weak consumer demand. That helped to cut underlying profits by 12 per cent to pounds 40.4m in 1995.

Noel Jervis, Courtaulds Textiles' chief executive, said the group had left many of the problems of last year behind it, but, as it warned in February, the US destocking had continued. There were now clear signs of improvement. The order pipeline was filling up as customers recognised that the de-stocking phase was coming to an end and, as a result, manufacturing activity was returning to a degree of normality.

However, he warned that the changing nature of the business would have an impact on jobs. The group has been running short-time working at its three US factories in the first quarter and recently laid off 100 of its 1,000-strong US workforce. At home it has axed 600 to 700 jobs with the closure of two spinning and several small clothing factories in the first three months of the year.

Investment Column, page 20

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Stockbroker

£Basic (OTE) + Uncapped Commission: Guru Careers: A Stockbroker (qualified / p...

Recruitment Genius: Financial Adviser

£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...

SThree: Graduate Recruitment Resourcer

£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

Guru Careers: Application Support Analyst / 1st Line Support

£25 - 30k: Guru Careers: We are seeking an Application Support Analyst / 1st L...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence