Exporter records F$4m loss in global downturn

August 25, 2009 06:32:51 PM

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Local furniture maker Pacific Green Industries Ltd has admitted it suffered badly in its main US market as a result of the global economic downturn, which led it to report a bleak half year ended June 30, 2009. 

In a meeting with brokers today, a senior official from the South Pacific Stock Exchange listed company revealed a net loss of over $76, 000, taking the company’s accumulated loss to over $4.1 million by the end of June. 

“USA was our major market and in the past 15months our sales had decreased by 97 percent, and the confidence of US consumers is very low,” said PGI general manager and company secretary Ravin Chandra.

“This is despite all the promotional and marketing efforts we have put in America. But we’re hoping to rebuild the US market in 2010.

“Shareholders will also have to realize that Pacific Green had yet to receive any compensation from the fire in 2004, which destroyed our manufacturing plant in Sigatoka.

“After PGI’s success in court over the issue of liability, there is an appeal in court by the insurance company. The hearing for that appeal is set for the first week of November 2009.  

“This means PGI not only has the ongoing legal costs to pay, plus the added cost of maintaining Fiji and its corporate structure with its little manufacturing capacity, but most damaging to us and our future is that after five years, we still cannot rebuild the manufacturing factory until the case is settled.
 
“PGI experienced a two percent reduction in sales revenue while the $76,000 net loss it posted represented a decline of 111 percent compared to the same period last year.  To try to cushion the blow from low consumer confidence in its main market, the company is trying to push into new markets, notably Dubai and the Middle East. 

“We have a very strong promotional program for the last quarter of 2009 and we’re going to hold promotions in Shanghai, Los Angeles, Hong Kong, Dubai, Moscow and Japan. Results from this should be strong enough to exceed our performance in 2008.”

Last year was a difficult one for PGI, as after tax profits declined by 200 percent to a loss of $413,000 despite a 3.8 percent increase in sales, a complete downturn compared to 2007. 

The company attributed last year’s decline to significant fall in revenue in the US market as well as a surge in manufacturing costs for its China-based subsidiary Golden Palmwood. 

PGI had pioneered sophisticated techniques in manufacturing specially designed furniture using palm wood and targets a high end niche market for its products.

It last traded at $2.10 on SPSE.