Tencel losses in 1997/98 blamed on Asia (1998)

Tencel had been making money - £10 million in 1996/97 but is expected to be in loss for the current year. The blame can be laid at the feet of Asia's problems. Asia is a major market for the fibre and the recovery in demand in the region has stalled. 

What Courtaulds calls the 'under-recovery' of the high costs associated with building the brand will leave Tencel in loss for the year. Plans for a new plant in the region have been put on hold until more settled economic conditions are achieved. The situation elsewhere in chemicals & fibres cannot be described as good. Margins are being squeezed by the strength of sterling, the result being the UK job losses. 

Courtaulds will sell to Hoechst its stake in the oriented polypropylene joint venture and acquire Hoechst's stake in the European Fibres joint venture. The result will be a net gain in the 1997/98 accounts. The viscose fibre business continues to be under severe pressure and Courtaulds says that its global capacity remains under review.

Source: ICIS 7th March 1998