MELBOURNE: Apparel, lingerie and footwear giant Pacific Brands has defied domestic and international cost pressures to lodge its strongest half year performance to date.
The Melbourne-headquartered company announced net sales in the first half of fiscal 2008 had exceeded $1 billion for the first time in any six month period, increasing by 26.5 per cent over the previous corresponding period to $1.1 billion. Earnings before interest, tax and amortisation were well above $100 million, increasing by 21.8 per cent to $113.9 million.
Chief executive officer Sue Morphet said while international sales were impacted by conversion back to the strong Australian dollar, the company saw good organic sales growth in its core domestic and New Zealand businesses. Rising production costs in China had also been assuaged through the streamlining of its supply chain process and the extension of its sourcing capabilities.
"Overall inflation in China is running at four to seven per cent with wage costs rising sharply," Morphet said. "Although this effects the whole market, we believe we are well placed to counter cost pressures through extending our strong sourcing capability into new areas and in working more closely with our strategy supply partners on efficiency and speed, reducing waste and duplication.
A full half-year of trade from the company's most recent acquisitions, The Yakka Group and Brand Collective, had also contributed substantially to the result with both expected to trade strongly into the future. Footwear, although not as buoyant as previous years, proved to be a steady category for Pacific Brands with a net profit after tax of $58.3 million, a 8.4 per cent increase over the previous period.
Morphet said the company's strong profitability and had allowed it to increase net operating cashflow to $31.4 million, up by 52.4 per cent on the previous period. She said the company would use the capital to attract "the right talent", invest in customer relations and eye prospective acquisitions.
"We are now concentrating on maximising the value from [homewares brand] Sheridan, the Yakka Group and Brand Collective but we will always review and evaluate further opportunities in appropriate categories."