Fruit of the Loom's Irish unit hit by 12-fold increase in losses
THE phased transfer of the Warren Buffett-owned Fruit of the Loom Irish operation to its lower-cost Morocco base has not ended the firm's problems.
New figures show that losses at the Co Donegal-based Fruit of the Loom International Ltd increased more than 12-fold last year to €31.6m. Fruit of the Loom is owned by Warren Buffett's conglomerate Berkshire Hathaway.
At its peak, the US-owned clothing manufacturer employed 3,500 people in six plants on the island of Ireland.
However, in 2004, the company announced that it would shut its remaining two factories, with the loss of 650 jobs in Donegal and Derry before the end of 2009.
The company today retains a small operation at Buncrana in Co Donegal and the directors' report shows that the firm made the loss in spite of revenues climbing by just under 10pc to €224m last year. The 2012 loss of €31.6m follows losses of €2.5m in 2011.
The company's director's report says that "2012 proved to be an exceptionally difficult trading year for the European Group.
"With our inventories loaded with prior-year inflated cotton costs, together with a continuing abnormal cotton price level and the inability to push through into the market place via higher selling prices meant the bulk was absorbed through the profit and loss as a cost".
Year-on-year volumes came in higher by 25pc, with revenues up 10pc. Selling, distribution and administration costs were down just over €2m, resulting in a significant loss of €31.6m.
The directors add that "various initiatives are under way to ensure the future success of the European group".
The losses last year resulted in the firm having accumulated losses of €203.1m at the end of December last. The firm's shareholder deficit totalled €98m.
The accounts show that the firm's parent, Fruit of the Loom Inc, advanced €262m to the firm. The Irish-based entity employs 27 people, with staff costs last year totalling €3.1m.