In an article in Aberdeen based newspaper The Press & Journal, cashmere and woollen knitwear manufacturer Johnstons of Elgin said its two mills were working flat out to feed demand for its products. Johnstons, which employs 600 people across sites at Elgin in the Scottish Highlands and Hawick in the Scottish Borders, added it was making the most of a weaker pound and is finding newly acquired competitiveness in its main export markets.

With the value of sterling against the US dollar plunging recently, helping sales of Johnstons’ luxury goods across the Atlantic, James Sugden, Group Managing Director, told The Press & Journal that the outlook for 2008 as a whole was very positive despite the current economic woes.

Sugden was speaking after it was recently revealed that Johnstons, which has been making knitwear, clothing and accessories on the banks of the River Lossie at Elgin since the late 18th century, returned to profitability last year. In an analysis of Johnston’s accounts, The Press & Journal said that the company made pre-tax profits of £2.187million in 2007, compared with losses of £977,000 the year before. Turnover for the latest period came in at £41.55million, against £39.89million previously, with more than one-third of the total down to exports.

A directors’ report with the accounts said profit margins last year were hit by higher raw material prices and a strong pound, while credit tightening in America was likely to have an adverse impact on profits in 2008.

James Dracup, Managing Director at the company’s Elgin plant, told The Press & Journal that Johnstons was cautiously optimistic about its performance this year, given the challenging trading environment, adding: “It would be churlish not to expect some impact on demand from the wider economic outlook.”

Johnstons, whose customers include Harrods and Selfridges in London and Bloomingdales in New York has been helped by recent falls in the value of sterling against other currencies. James Sugden said: “The current terms of trade in euroland, the US and the Far East are significantly better for us and we are making major efforts to capitalise on this.”

“While the overall economic picture is gloomy, Johnstons’ products, particularly accessories, continue to enjoy a good following in all markets and we are not daunted by the uncertainties that abound.”

He said Johnstons’ mills were now working at full capacity to complete orders at the same time as preparing for new collections. He added: “We see this trend continuing. Making luxury products in Scotland is our mantra and we believe this will stand us in good stead as it has done for 210 years.”

Last year’s return to a surplus was attributed to significant reorganisation, including changes to shift working patterns, to reduce costs.  Sugden said: “The benefit of these changes has now worked through.”

“The current 2008 climate is extremely challenging, but, although our unit turnover is a little down, we have increased the percentage of higher added-value products, which is contributing to our overall profitability.”

He also said some buyers had returned to UK sourcing after a dalliance with offshore or Chinese suppliers offering cheaper ‘throwaway’ textiles. He added: “Many customers now do not want disposable clothing and are returning to quality, and provenance is once more important. This is a strong selling point for us.”

Source: www.pressandjournal.co.uk