Schaffer profits drop but expansion is in hand

Leather and property group, Schaffer Corporation of Perth, have reported a sharp fall in earnings in the December half-year, with profit down 34% from A$10.1 to A$6.7 million (US$5.3 million) as earnings in the two main divisions fell, taking group revenue down 27% to A$76.6 million (US$60.7 million). Revenue fell 16% in the automotive leather division after the Chinese government restricted consumer credit. This depressed car sales and affected auto suppliers, reducing demand for Schaffer's leather, made by their Victorian subsidiary Howe Leather. Executive chairman John Schaffer, however, was optimistic about the future of the car industry in China, and Howe Leather plan to set up a leather-cutting plant in Shanghai. Mr Schaffer added: 'The leather division lost a further A$2 million with the rise in the value of the Australian dollar against the US dollar, but the currency problem will gradually ease as the company are moving to set up a processing plant in Slovakia in Eastern Europe, and production of cut sets from this facility is scheduled to begin in April 2005. Slovakia is ideally located geographically to supply Howe's European customers Audi, BMW and Land Rover, and will generate income in euros.'