Sirdar to sell off yarns operation

Manufacturing News, Source : TheManufacturer.com
Published : 29 Mar 2007 12:43

Knitting yarn and carpets group Sirdar confessed today that 2006 had been “very challenging” and that it is now resolved to sell off the yarns business.

Issuing its interim report for the six months to 31 December, Sirdar said sales and margins had been under pressure in its floor coverings division and the fashion led boom in hand knitting yarns, which had boosted the results of its specialist yarns division, had come to an end.

“In reaching our view that the needs of the group’s shareholders would be best served by focusing on our floor coverings business, it becomes clear that the needs of the specialist yarns division would be better served under different ownership and we will therefore be seeking to sell that division,” the company said.

As a consequence, Sirdar’s site at Flanshaw Lane, Wakefield is to be sold, with the funds generated by the sale being used to finance the restructuring of the group, reduce bank debt and pension deficit.

Over the last 12 months a number of changes have seen the relocation of bespoke manufacturing from Rochdale to a centre of excellence at Wakefield, the closure of Spenbrook Mill manufacturing plant and the cessation of yarn spinning activities at Oxford Mill, Bury.

The company said a number of other changes are planned for the near future including the setting up of a second centre of excellence in Lancashire as well as the closure and sale of the operation’s headquarters and main manufacturing site in Rochdale.

Looking forward, Sirdar said the short term prospects for both its divisions were “very challenging”. The Floor Coverings division was focusing on new product development and innovation but recent increases in interest rates and uncertainty over the level of public sector spending meant that the market remained difficult.

The specialist yarns division expects growth in technical products to continue but sales of hand knitting yarns were likely to be subdued over the next few months as the business reverts to its normal pattern of seasonality.

Sales for the half year to 31 December 2006 were £34.3 million (2005: £38.4m) generating operating profit, before exceptional costs, of £1.5 million (2005: £3.5m).

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