NEW YORK — With help from a leaner and meaner apparel fabrics division, Dan River Inc. returned to second-half profitability, even as sales sank.

Net profits mounted to $3.7 million, or 16 cents a diluted share. This compared with year-ago losses of $6.1 million, or 28 cents. Year-ago results were improved by goodwill amortization of $900,000, or 4 cents a share, while the most recent quarter included none after a change in accounting principle.

Sales for the three months ended June 29 retreated 4.9 percent to $153.9 million from $161.9 million a year ago.

Chairman and chief executive officer Joseph Lanier Jr., in a statement, attributed the improved profits to "better manufacturing performance from increased capacity utilization, lower raw material costs and an improved product mix."

The firm’s apparel fabrics business, which represented 24 percent of overall revenues in the quarter, drove sales up 9.2 percent to $37 million from $33.8 million a year ago. From these sales, the division turned a corner in profitability, recording operating income of $1.3 million compared with losses of $1.8 million a year ago.

Lanier said the division’s return to profitability was a function of new products and "much better capacity utilization" after downsizing earlier this year with the closure of two plants and an overall head count reduction of about 190 people.

"Our product development efforts are resulting in orders for new constructions and designs," said the ceo. "These new fabrics, primarily bottom-weights, were the source of the segment’s growth in sales."

While Dan River’s engineered products business posted decreased sales and continued losses, the home fabrics business shined. Sales in home fabrics declined 8.4 percent to $107.2 million from $117 million a year ago. The division’s operating income shot up more than 350 percent in the quarter to $12.2 million from $2.7 million a year ago.

For the six months, losses narrowed to $1.5 million, or 7 cents a share, from $12.7 million, or 58 cents, a year ago. Excluding special items related to income tax expense and bad debt, net income for the half would have totaled $2.2 million, or 10 cents a diluted share. This compared with year-ago losses of $12.7 million, or 58 cents, including $1.6 million, or 7 cents, for goodwill amortization.Sales during the half slid 4.1 percent to $312.4 million from $325.9 million a year ago.

"Barring something unforeseen with the economy, we should continue the momentum we have shown in the first half," said Lanier.

The Danville, Va.-based firm now anticipates hitting the upper end of its previous earnings guidance of 30 to 40 cents a share during the second half.

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