Beige posts bigger loss in challenging period

Beige's losses have continued to mount amid tough trading conditions. Image: David Castillo Dominici Free Digital Photos

But management said the group was in a "sound" financial position and had access to sufficient borrowing facilities to meet its foreseeable cash needs.

Beige said it had returned to profitability in the first two months of the 2014 calendar year and it expected further cost reductions. Its "healthy order book" continued to boost prospects.

The group‚ which has gone through a number of directorship changes over the past few months‚ has no full-time chief executive.

Recently-appointed executive chairman Gora Abdoola has been acting as the chief executive since mid-December.

For the six months ended December‚ Beige's revenue fell 17% to R273m. Its operating loss was R18.2m‚ more than the R13.4m in the previous period. Beige said the six months were "extremely challenging"‚ with economic uncertainty affecting both multi-national and local retailers.

The company said volumes were subdued‚ as key customers stopped buying outsourced products and changes in in buying patterns meant the product mix often favoured lower-margin products.

The group said price increases in the last calendar year did not fully offset input price increases. Beige said the fall in revenue was worsened by the seasonal increase in volumes not materialising towards the end ast year.

Gross margins fell one percentage point‚ from 10.3% to 9.3%. Beige said that while conditions remained difficult‚ its order book for the rest of the financial year was "robust and healthy" in the outsource manufacturing segment and volumes were expected to grow "materially" compared with the first half.

While the packaging segment's volumes were expected to remain flat‚ cost reductions will serve to reduce the losses substantially.