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Production of Hellenic's indigo denim fabrics higher in 2007

01
Apr '08

In 2007, despite the fact that the Group faced a very competitive environment, it followed an aggressive policy in both existing and new developing markets, thus increasing the sales of its main product, denim fabrics, by 21% while 92% of total turnover was exported to more than 30 countries.

Its two main markets showed an increase in sales of more than 35% while the biggest market remains that of Italy. At the same time, sales in non-European Union countries increased by 30%. Within the Group's clients are most of the well known brand names in jeans manufacturers internationally.

The parent company's turnover in 2007 reached 75.5 million Euro against 69.72 million in 2006, increased by 8.3% while the Group's turnover was 82.74 million Euro, against 84.17 million in the previous year. Despite the increase in sales of denim fabrics, the drop of the total turnover is mainly due to the decreased sales of raw cotton.

Nevertheless, the Group's efficiency was affected by the following important factors that led to a negative result for the first time in the last decade:

• Maintaining the average selling price of denim fabrics at the 2006 levels. Within the frame of the aggressive policy for promoting new products and entering new markets and bearing in mind the very negative impact of the exchange rate of Euro against the US dollar, it was decided to maintain the prices at the same levels with those of 2006, since invoicing is in Euro terms.

• Increase of the production cost of indigo denim fabrics. Despite the fact that the production of indigo denim fabrics was higher in 2007 by 9% towards 2006, the intensively increasing cost of electricity, oil and other chemical materials resulted in the increase of the production cost. It is highlighted that part of this increase is also due to additional finishing processing of new products promoted by the Group in 2007. This increase in the production cost, combined with the maintaining of prices at the same levels, compressed the gross profit margin.

• Sale of old fabric stocks that were produced until 2006, in low prices. This quantity was about 9% of the total sales turnover.

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