Disposal in US pushes Dawson into pounds 80m loss: Pringle maker signals a deep cut in its dividend

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The Independent Online
DAWSON International, the woollens company responsible for Pringle and Ballantyne jumpers, will report pre-tax losses approaching pounds 80m for the year ending this month.

The losses are largely due to its decision to dispose of a troublesome US subsidiary, JE Morgan Apparel, with 2,000 job losses.

The disposal was predicted by the Independent last month, when Dawson said its results for the current financial year would be scarred by a substantial provision.

Dawson said yesterday that it would cost pounds 50m in one-off charges to get out of the Morgan businesses. In addition, profits would be depressed by the write-off of pounds 42m of goodwill. Analysts are predicting that Dawson's underlying profits will be about pounds 15m, compared with pounds 32m last time.

Sir Ronald Miller, chief executive, said: 'We were a very small player in a very difficult market and we decided we could not make a go of it.'

He said the combination of weak sales, a stock build-up and competition from Third World imports created deteriorating trading conditions.

There was further bad news yesterday as Dawson prepared the ground for a deep cut in the dividend. 'The board currently expects to recommend a final dividend of not less than 1.5p,' it said.

A 1.5p final will make 3p for the year, below the already undemanding expectation from the City that Dawson would halve last year's 9p payout to 4.5p.

At yesterday's closing price of 152p, down 6p on the day, the shares yield 2.5 per cent. Since the warning about the provision on 10 February, the shares have risen from 130p, but during the past 12 months the stock has underperformed the market average by 50 per cent.

Dawson is also considering the sale of DHF, its US-based home furnishings company. In the year to last March, DHF achieved sales of pounds 60m and operating profit of pounds 4.7m. In the following six months, however, DHF only broke even.

Dawson revealed debts of nearly pounds 100m yesterday, including pounds 28m of convertible preference shares. The company has not yet gained the approval of convertible holders to proceed with its reorganisation and said it might have to refinance the convertible part of its debt.

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