Friday, October 12, 2012

Volatile prices cause cash evaporation at Courtaulds (1996)

The early announcement of SL4 looked premature even then. Presumably the marketing campaign being planned was in addition to the one that had taken Tencel into profit.

In order to reduce the price volatility that resulted in a 13% fall in 1995 profits, Courtaulds, the chemicals group, is negotiating long term contracts with leading suppliers. The acrylic and viscose fibre business had an extremely bad year because of the volatility of raw material prices as the chemical industry emerged from recession. The company already has two agreements linking purchase prices to selling prices, and more are being discussed. Tencel, the group's new fibre which handles like silk but has the durability of denim, moved into profit for the first time. Demand continues to exceed the ability to supply, despite the addition of extra manufacturing capacity. A fourth plant will be added in the Far East, and Courtaulds is planning a marketing campaign to stimulate consumer interest in Tencel, which is available in clothes ranging from jeans to cocktail dresses.

Cowe R., The Guardian., 23 May 1996, p. 21 (P)

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