Pentland hit by pounds 10m US losses: Trade finance business will be closed

LOSSES of nearly pounds 10m on a US- based trade finance subsidiary knocked a hole in profits at Pentland, the textiles to domestic appliances group that owns the Speedo swimwear brand.

Pentland made pounds 2.8m operating losses in the trade finance business and set aside pounds 6.7m for closing it down. The company, which set up the troublesome subsidiary only two years ago, said that continuing depressed consumer spending in North America had led to the problems.

Shares slumped 11p to 102p at one point yesterday, but recovered ground later in the day to close at 106p.

Pentland financed imports, mainly from the Far East, to US wholesalers, which in turn supplied retailers. Poor high street conditions increased debts, however, and Pentland decided to close the operation before it got any worse. Losses of pounds 2.8m this time compared with pounds 200,000 in the first half of last year and pounds 2.2m in the whole of last year.

Overall Pentland's taxable profits slumped 66 per cent to pounds 6.7m, compared with pounds 19.7m last time.

Stephen Rubin, chairman, said: 'We have discontinued this activity as it was not central to our strategy and we were no longer satisfied with the risk-reward ratio.' Pentland has net cash of pounds 250m. Its cash pile represents profits from a series of shrewd investments - most notably in the training shoe company Reebok, from which it made pounds 400m. Profits in the six months to 30 June suffered a double blow from lower interest rates.

Pentland is aggressively looking to spend its money elsewhere but Frank Farrant, finance director, said it would carefully examine its options. Results also suffered because of slowing profits in continuing businesses. Pentland finds cheap sources for footwear brands, such as LA Gear and Lacoste, for which weak consumer demand in the US and Britain led to a decline in profits from pounds 4.4m last time to pounds 3.4m this year.

However, the contribution from businesses new to the group, including Berghaus, the outdoor clothes maker, added pounds 1.4m.

Earnings per share fell to 0.4p from 3.7p but the interim dividend was increased 12 per cent to 1.2p.

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