Klementi moves into black, eyes eastern expansion

  • 2006-05-17
  • From wire reports

SORTING OUT STYLES: Klementi, which has struggled over recent years, has managed to post a first-quarter profit despite a slight fall in sales.

TALLINN - The Tallinn-based garment maker Klementi posted a small profit of 465,000 kroons (29,710 euros) for the first quarter despite a 3 percent drop in sales. The company announced that first quarter sales amounted to 31.1 million kroons, while retail sales jumped 14.1 percent to 16 million kroons. Retail sales in Latvia alone soared 76 percent.

Wholesale turnover dropped 17.6 percent compared with the first quarter of 2005 since the company has not been selling output on a wholesale basis in Sweden and Norway since the second half of 2005.
Meanwhile, sales efficiency of retail areas rose 24 percent in comparison with the first quarter of 2005, the company said. At the end of March the Klementi concern operated 11 stores with a combined sales area of 2,588 square meters.
CEO Peeter Larin said the company has expansion plans for Lithuania, Ukraine and Russia, in addition to Estonia and Latvia, though it would not enter any new markets this year. There are several possibilities for financing the expansion such as borrowing and increasing stock capital, he added.

However, CFO Marianne Paas said the company needed to demonstrate its stability to banks in order to procure a loan, which Klementi has struggled to do in the past but has been able to as of late. The firm's loan burden currently stands at around 20 million kroons (1.2 million euros).
Larin told reporters that Klementi did not plan to drop production. "Not a single reason for this exists at the moment 's neither logistically nor relating to price advantages," he said. Right now, he added, expansion of production is hindered by a shortage of labor.

Klementi's 12 stores, seven in Estonia and five in Latvia, are operating under the PTA trademark. The parent company of the concern intends to change its name to PTA Group, which would own a production unit called Klementi. The plan is subject to approval by a general meeting of shareholders.
The decision comes after a major shareholder shakeup last month. Bryum Estonia, one of the major owners of the women's clothes maker Klementi, sold its 27.66 percent stake in the company.
Bryum Estonia is headed by Indrek Rahumaa, Andres Ratsep and Toomas Leis, partners in the investment firm Alta Capital, which is the largest owner of Klementi.

Hansabank reportedly acquired some of the holding, although with an aim to resell to a client, according to Baltic News Service.
Alta Capital also owns 85 percent of Latvia's Lauma, the largest manufacturer of lingerie in the Baltics. In 2005, Lauma generated 23.8 million lats in preliminary sales, up 18 percent from 2004. Lauma exports 83 percent of its lingerie and material production.
In April, Lauma Fabrics, a subsidiary of Lauma, announced that it had purchased two lace producing machines for more than 1 million lats (1.42 million euros).
The new equipment will allow lingerie producers to choose different lace patterns and thus meet individual needs.