Friday 17th October 2003
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The company, in a statement, says lower than anticipated third quarter performance by parts of its Shanghai leather operation is ther reason behind the downgrade.
"Directors are disappointed at having to downgrade the profit forecast, particularly given the significant progress the company has made in the past 12 months in almost all other areas of our business."
Directors did indicate at the time the half year report was issued that achieving a $6.5 million profit for the year was a "challenge" and was dependent on the performance of Shanghai Richina Leather (SRL).
SRL chief executive Dennis Thams says that SRL's major business in Bovine shoe leather remained strong and will perform to budget for the year.
The single biggest challenge SRL faced this year was within the Ovine garment business, where the bulk of the profit shortfall lies. Ovine suffered production quality problems partially resulting from poorer than usual quality of the pelts it purchased this season.
In addition, the global market for leather garments is weaker than anticipated, resulting in lower volumes and margins.
The company says changes have also been made to the way the business is managed, however these changes won't help the performance.
"The financial performance of the division to date has been very disappointing," the company says.
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