The company, which is in the midst of a restructuring of the Richemont luxury goods and tobacco empire that will bring it together with the jewellery group Cartier, has run into problems because of speculation on the yen, one of its main trading currencies.
Apparently, the group decided to hedge its income from Japan by selling yen in forward contracts on the foreign exchange markets. This meant that it sold yen it did not have in the expectation of receiving yen income from selling its luxury goods in Japan, one of Dunhill's main markets.
However, sales of Dunhill goods in Japan have fallen, largely because of the recession hitting the country.
At the same time the yen has soared to record levels relative to sterling. It closed yesterday at Y152.7 to the pound compared with Y248.5 a year ago, an appreciation of more than 60 per cent.
Lord Douro, chairman of Dunhill, would not comment on the losses yesterday. His office said he did not wish to talk about anything to do with the restructuring ahead of today's publication of the prospectus.
Richemont, a Swiss-registered company controlled from South Africa, is to refocus its business interests into two groups. One, called Rothmans, will control all the group's tobacco interests, which include the eponymous international cigarette brand.
The other, called Vendome after the location of the headquarters of the Cartier business in Paris, will combine all the luxury goods companies. These include Dunhill, Cartier, Montblanc, Chloe, Baume & Mercier, Sulka and Hackett. The new companies, to be quoted in London, will have a combined market capitalisation of more than pounds 3bn. Richemont will have 61 per cent of Rothmans and 70 per cent of Vendome after the restructuring.
There has been some suggestion that Dunhill shareholders might oppose the restructuring and the group's shares have slipped from 406p to 375p since it was first announced.Reuse content