Elmo report profit loss

15 October 2001

The Elmo Leather Group, one of the world's ten largest manufacturers of exclusive leather for the international furniture and automotive industries, have reported a deterioration in the company's first half 2001 results due to exceptionally high raw materials prices in the period which could not be covered by corresponding price increases for finished leather. Results from activities in North America were negatively affected by weaker demand for furniture leather and by increased price competition from non-American suppliers due to the strength of the US dollar. The company have reported a loss after net financial items of SEK3.2 million (US$302,516), while net sales climbed 27% to SEK554.7 million (US$52.4 million). Sales volume rose 10% to 2.1 million square metres of finished leather. During the first six months, the group noted a strong surge in demand for leather from the automotive industry and, mainly in Europe, continued good demand for furniture leather. But in the US, the market for furniture leather began to weaken during January and February. To match the fall in demand, a production shift was cancelled and then for one week in May, all the staff at the US factory were laid off as production closed down. The full effect of lower prices on the group's profits will not be felt until the end of the year, and the company expect 2001 to be an intermediary year and will be considerably lower than the all time high profits recorded by the group last year.

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