Pacific loss blows out to $234m

The group, which will not pay a dividend until its performance improves, reported that sales fell by $116.6 million, or 5.5 per cent, in 2008-09 to $2 billion. Excluding divested businesses and discontinued brands, sales were down 1 per cent.

Chief executive Sue Morphet said economic conditions remained tough, but Pacific Brands was cautiously optimistic. Earnings would fall further in the first half of this financial year, but should improve in the second half as the cost savings of the restructuring came into effect. In the long run, sales revenue would reduce, but the business would become more profitable, she said.

The Pacific Brands' 2010 strategy, announced in February, involves the retrenchment and retraining of more than 800 staff, the revamp or loss of more than 150 brands, the closure of several factories, the improvement of workforce skills, and prioritised marketing spending.

Significant items involved in the restructure were $380.6 million in cash and non-cash expenses relating to goodwill, brand names, plant and equipment and other assets.

Ms Morphet said one-off cash restructuring costs in 2008-09 were budgeted at $79 million, but had blown out to $104.3 million. More one-off cash restructuring costs of $35.7 million, compared with the original estimate of $15 million, would be made over the next two financial years.

Ms Morphet said the cost base was being restructured, and more resources were being devoted to key brands such as Bonds, Berlei, Sheridan, Hard Yakka and King Gee, which had experienced some growth.

Debt had been reduced by $290 million to $452.8 million, with gearing and interest cover both lower.

Pacific Brands shares closed down 13.5?, or 10.23 per cent lower, at $1.185.