DAWSON International is warning its pension trustees that administration costs are “unsustainable” in the current market conditions.
The firm warned that the high costs of raw materials such as cashmere and especially cotton are causing its major US-based customers to scale back or cancel orders which means it is set to be loss-making in 2011.
David Bolton, executive chairman, said negotiations with the trustees of the defined benefit scheme had been going on for years and a solution was now “vital”.
He said the firm’s pension liabilities meant there was “no prospect” of raising further investment to “grow the business”.
Nevertheless, he insisted it had a “strong cash position” ending the year on 1 January with net funds of £11.6m.
Yesterday, Dawson said underlying turnover – stripping out exceptionals and those parts of the business which it has sold – was up £1m to £65.7m, while underlying profits on the same basis narrowed from £2.2m to £800,000.