Customer bankruptcy hits profits at Leeds textiles manufacturer

PROFITS at textiles wholesaler Leeds Group are down following the bankruptcy of a major German customer.

In the year ended 31 May 2016 Leeds Group’s pre-tax profits fell by 4.1% to £1.5m, which the company said was due to the year-end bankruptcy of the client.

The group said this was partially offset by credit insurance.

The business, which operates largely under the Hemmers brand, spent £4.16m (up from £298,000 last year), on the acquisition and extension of the German warehouse and office facility.

Over the past two years Leeds Group made a significant investment in KMR, and in the purchase and expansion of the Nordhorn facility, where a further £1m was committed to complete the project.

Despite the difficulties with its German customer, Leeds Group said that the UK’s decision to leave the European Union had not posed a “material risk” to the business.

It said: “Following the UK referendum result in favour of leaving the European Union, the economic environment has become much more uncertain. However, the business of Leeds Group is conducted entirely by subsidiaries incorporated in Germany or China, and their exports to the UK account for approximately 4% of Group revenue.

“Of greater risk is the possibility of reduced demand owing to falling consumer confidence, although the business has proved robust in earlier recessions with some evidence that reduced consumer spending on ready-made apparel or furnishings generates increased demand for Hemmers fabrics that customers use to make equivalent goods in the home.” 

 

 

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