An export credit from South Africa made the difference between profit and loss for Novel Denim Holdings Ltd. during the first quarter.
During the three months ended June 30, the Hong Kong-based apparel and fabric producer reported net income of $320,000, or 4 cents a diluted share, versus a loss of $6.2 million, or 68 cents, in last year’s first quarter.
“While our new South African garment operations lost money on an operating basis, we benefited from the receipt of $1.4 million as part of the South African government’s export credit program, allowing us to report a profitable quarter,” said K.C. Chao, president and chief executive of Novel, in a statement.
He noted that Novel had “worked to improve our garment operations and reached profitability in Mauritius” during the quarter. As reported, Novel is one of several manufacturers that have either downsized or terminated operations on the island nation, and it plans to close six of its 16 remaining plants there next month.
Sales dropped 3.2 percent to $39.6 million during the quarter, against $41 million in last year’s quarter. Garment sales dropped 7.4 percent to $22.7 million, with about 64 percent in denim and the remainder in chinos, while fabric revenues rose 3.7 percent to $16.9 million. U.S. customers represented 60 percent of garment sales, down from 65 percent a year ago.
Chao said the firm expects a “small profit” for the fiscal year, “assuming the current economic climate remains constant.” Expectations continue to be for a first-half loss and second-half profit.
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