It said last Thursday the loss for the year would be 198c per share, compared with earnings per share the previous year of 55,8c. There would be a headline loss of 111c per share against the previous year's headline earnings per share of 22,7c.
Seardel stock plunged 47% on the news on Thursday to 120c, with 40000 shares traded in two deals. However, the stock regained ground on Friday, rising 30c, or 25%, to 150c, also on low turnover: 6000 shares in two deals.
Seardel issued cautionary notices in June, last month and this month, saying it could not quantify its substantial trading losses. The losses were due in part to retrenchment costs.
Seardel has had a torrid time in recent years as cheap clothing and textile imports hit profitability and eroded its market share. Inflation and higher energy costs are adding to its woes.
The group had a rights offer this year to raise R300m to strengthen its balance sheet and retain borrowing facilities. The offer was underwritten by HCI and Grawood Investment, a company controlled by Seardel founder and majority shareholder Aaron Searll, to the tune of R200m and R50m respectively, which has given Searll effective control of Seardel.
Seardel is expected to release its results today.
The group's underlying net asset value is R1,5bn (about R16 a share). Talk has been rife that HCI could asset strip it, but analysts say it would be hard for HCI, an empowerment group with strong union links, to justify the loss of thousands of jobs.
With the investment arm of the South African Clothing and Textile Workers Union (Sactwu) effectively controlling HCI, the hardline Sactwu has the opportunity to flex its muscle on industrial policy formulation.
Seardel is SA's largest clothing maker, outsourcing much of its work to cut, make and trim operations. Industry sources say these operations are not likely to oppose the group's proposals to the trade and industry department on the direction the sector should take.
Source: Business Day
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