ATLANTA — Driven by operational improvements and growth of premium value-added products, Unifi, Inc. reported a net income of $771,000, or one cent per share, in the fourth quarter, ended June 29.
Unifi had reported a net loss of $74.2 million, or $1.23 per share, in the year-ago quarter. For the fiscal year, the Greensboro, N.C.-based fiber company reported a net loss of $16.2 million, or 27 cents per share, compared to a net loss of $115.8 million, or $2.06 per share, in fiscal 2007.
Fourth quarter sales rose slightly to $189.6 million from $185.3 million a year ago, and fiscal 2008 sales rose 3.3 percent to $713.3 million from $690.3 million in fiscal 2007.
Despite the improvement in profits, the quarter’s net income was stung by impairment charges and operating losses of its Chinese joint venture. Unifi said it has agreed to sell its 50 percent ownership interest in Yihua Unifi Fibre Industry Co. Ltd. (YUFI) to its partner, Sinopec Yizheng Chemical Fiber Co. Ltd., pending final negotiation and execution of definitive agreements and Chinese regulatory approvals. The quarter’s net income was negatively impacted by $8.8 million in impairment charges and operating losses of YUFI.
Net income was also affected by a $3.2 million discontinued benefit from the pending liquidation of Unifi’s former operations in the U.K. and $2.1 million of gains related to the sale of non-productive assets.
Unifi said it will continue serving customers in China. The company plans to form Unifi Textiles Suzhou Co. Ltd. (UTSC), a wholly-owned, China-based subsidiary that will focus on the development, sales and service of premium value-added yarns for customers in the region. Unifi said the new entity, which will be based in Suzhou, China, is expected to begin operations by the end of its second fiscal quarter, or between October and December this year.
Ed Wickes, who is currently president and general manager of the YUFI joint venture, will serve as president of UTSC.
Ron Smith, CFO, said, “The supply-chain management and operational improvements made throughout the fiscal year, as well as continued growth in our premium value-added products, have driven our improved performance over the last two quarters. Our sourcing strategy for raw materials enabled the company to partially contend with escalating raw materials costs, which saw double digit increases during the quarter.”