GREENSBORO, N.C. -- High cotton costs and a cautious apparel fabrics marketplace were reflected in flat earnings reported by Cone Mills Corp. for the fourth quarter.
For the year ended Jan. 2, earnings were up 14.3 percent.
Operating profits declined 4.8 percent to $19 million in the quarter from $20 million a year earlier, hurt by the increased cotton costs and depreciation expense at its apparel segment.
Net income for the quarter was flat at $11.5 million, or 39 cents a share, against $11.6 million, or 39 cents. Helping to pull up the most recent bottom line were lower interest expense and the earnings on the equity investment in Cone Mills' Mexican denim affiliate, the company said. J. Patrick Danahy, chief executive officer, pointed out that despite the problems in the quarter, the company was able to match last year's strong quarter.
Looking ahead, Danahy said that while consumer demand for casual apparel fabrics remains strong, he expects denim inventory pipeline adjustments to continue in the first half of 1994.
"Longer term, we believe Cone Mills' core international business strengths and sound financial condition position the company for quality future growth," he said.
Total sales in the quarter were flat at $179 million. The company noted that the year-ago period included an extra week. Apparel fabric segment sales in the quarter were down slightly to $131.5 million from $132.2 million, as customers adjusted inventory levels. The cotton costs, higher depreciation expense and a less favorable mix drove apparel segment profit margins down to 11.5 percent of sales from 14.5 percent for fourth quarter 1992 In the year net earnings were $49.6 million, or $1.68 a share, against $43.4 million, or $1.59, after a $2 million charge for early retirement of debt. At year-end Cone Mills had 27.9 million shares outstanding, against 24.5 million in 1992 before an initial public offering.
Sales for the year rose 9 percent to $769.2 million from $705.4 million. The company said strong performance for the year was driven by heavyweight denim, commission finishing and flannel shirts. Export sales rose 16 percent to $132 million, or 17.1 percent of total sales. Gross profit as a percentage of sales was 20.7 percent for both 1993 and 1992. Operating profit margin was 11.1 percent of sales for both years. Net income as a percentage of sales was 6.4 percent for 1993 equaling 1992 income before extraordinary items. Apparel fabric backlog was down 3.4 percent at yearend to $157.7 million.Cone Mills is the largest producer of denim in the world, according to the company. Its plants are in North Carolina, South Carolina and Mississippi.
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