In 2008, the Group was active in a particularly competitive environment where, despite the negative international developments, it managed to maintain its turnover to roughly the same levels as the previous year. The Group's turnover thus amounted to 81.6 mln euro, as compared to 82.7 mln euro of last year.
Global circumstances negatively affected denim sales particularly during the final quarter of 2008. With 93% of denim sales being exports, the parent company's turnover was negatively affected for the fiscal year 2008 and amounted to 65.4 mln euro as compared to 75.5 mln euro in 2007.
Simultaneously, the Group's efficiency was negatively affected from the following factors, resulting to the Group reporting a negative result.
· Increase of denim fabric production cost.
The reduction of sales during the 4th quarter of 2008 inevitably affected production volume, which resulted to the increase of average cost per denim fabric meter, that was further charged by the raise of oil price and energy cost during the biggest part of the year 2009.
This production cost increase has compressed the gross profit margin, besides the improvement in the average selling price by 1.8%.
· Charge of company's results by about 2.3 mln euro, due to extraordinary one-off expenses mainly arising from the compensation cost of production personnel reduction and from transferring of machinery from the company's spinning mill in Sindos to the subsidiary "Kilkis Spinning Mills S.A.", for the achievement of economies of scale in yarn production.
· Provisions charged in last quarter, amounting to 0.45 mln euro, concerning mainly decrement of inventories and increase of provisions for bad debts.
As a result of the above, consolidated net results before taxes, interest and depreciation (EBITDA) amounted to -1.5 mln euro, while loss before taxes to 11.66 mln euro against loss 8.5 mln euro in 2007. Also, loss after taxes and minority rights reached 7.2 mln euro in 2007 and 10.07 mln euro in 2008.
Depreciation during 2008 amounted to 6.4 mln euro and equity capital to 70.24 mln euro.
Parent company's financial results before taxes, interest and depreciation amounted to -3.43 mln euro against 0.24 mln euro in 2007, while loss before taxes to 9.87 mln euro in comparison to 5.97 mln euro in 2007. Loss after taxes amounted to 8.85 mln euro, from 5.57 mln euro last year.
HELLENIC FABRICS S.A. remains among the three leading denim producers in Europe, supplying the most important brand names in jeans manufacturers. In this context, it continuous its strategy in manufacturing and promoting new types of denim fabrics, with innovative and unique characteristics.
The company already applies a program for further cost reduction and hopes that with the end of the international financial crisis, it will return to profitability.