Kidderminster, England, June 23--Carpet producer Victoria today said a difficult year had resulted in a 21% fall in annual profits to £3.73 million, according to the Scotsman.com.
Victoria said it had experienced tougher conditions in all its main markets in 2004/5, which it said had seen the demise of several of its rivals.
The group said a decline in consumer confidence and spending had affected its UK and Irish business.
It said in February that it was ending production of Axminster carpets at its base in Kidderminster due to cheap foreign imports and changing consumer tastes.
Victoria said it did not foresee the return of more favourable economic conditions in this financial year, given an economic outlook for the UK, Australia and Ireland that remained at best flat.
"However, even in this climate, we believe we are able to deliver profitable growth through a continuing concentration on customer service and an acceleration in the introduction of new product ranges," the company said in a statement.
Victoria said it saw a slowdown in consumer demand in the UK, particularly in the second half of the year, as consumers started to rein back spending in the face of falling house prices, higher fuel costs and the prospect of rising taxes.
In the UK and Ireland, it had also seen an acceleration in the market penetration of low cost foreign producers of Axminster carpet.
It decided the returns from its UK Axminster manufacturing operation were unacceptable and today said it had completed the closure within budget, with the loss of up to 85 jobs.
Victoria said it believed the end of Axminster production after more than 50 years would enable it to focus on its less labour-intensive and more profitable tufted and specialist Wilton weaving businesses, which generate 95% of sales.
The firm said the residential market for Axminster had shrunk by more than 50% in the past four years as homeowners opted for laminates, wooden floorings and rugs.
It said its continuing operations in the UK and Ireland remained profitable, turning in pre-tax profits of £580,000.
The company employed 340 staff prior to the Axminster closure and has further factories at Holmfirth in West Yorkshire, Ireland and Australia.
