Airea is to close its loss-making residential carpet manufacturing subsidiary Ryalux to concentrate on the contract sector.
The group has begun a consultation with the company’s 50 staff and expects it to close by the end of April.
Ryalux made an operating loss of £3.1m from sales of £9.9m in the 18 months to 31 December 2017. In recent months it had been offering major discounts on ranges.
‘The trading environment for residential carpets has worsened and the ongoing trend to cheaper synthetic products has led to further declines in demand for high quality wool carpets,’ it said.
Airea said the closure will be cash generative with the sale of stock and machinery exceeding closure costs. It said it would invest in its Burmatex subsidiary, which had an operating profit of £4.3m from sales of £26.9m in the 18 month period.
‘The changes we are making to the business and the increased investment in our successful commercial flooring business provides significant opportunities for profitable growth. Given our confidence in the future prospects of the business, the ongoing improvement in the performance of the commercial floorcoverings business, and the cash surplus arising from the actions taken in the residential carpets operation we will be proposing a special dividend payment of 5p a share.’