While Unifi Inc.’s second-quarter earnings dropped 31 percent, a strong performance from the company’s domestic texturing business and premier value-added products such as its Repreve line helped stem the decline.

Unifi Inc., based in Greensboro, N.C., on Thursday reported net income for the second quarter ended Dec. 27 fell to $6.5 million compared to net income of $9.4 million for the prior year quarter.

Net sales fell 5 percent to $156.3 million in the quarter compared to $164.4 million for the prior year period, resulting from the devaluation of the Brazilian real and soft polyester prices associated with lower raw material costs. Unifi said the polyester and nylon segments experienced sales increases.

The company pointed out that gross margin as a percentage of sales remained strong at 14 percent, consistent with the prior year quarter, citing a strong performance in the texturing and value-added products, as well as continued growth for in subsidiary in China.

Unifi said net cash provided by operating activities increased to $15.4 million for the six months ended Dec. 27, up $5.8 million from the prior year period, and principal under the term loan of its existing credit agreement was increased to $95 million, as part of the first annual reset under that facility, enhancing the company’s ability to continue its growth-oriented capital projects.

“We are very pleased with the strong performance in our domestic operations, which continues to be driven by the increase in synthetic apparel produced in the NAFTA and CAFTA regions and the strength of our premier value-added yarns,” said Roger Berrier, president and chief operating officer of Unifi. “The capital investments that we have made to support capacity growth and the production of our premier value-added products are delivering results consistent with our expectations, and they have helped the company offset the negative impact of the currency devaluation in Brazil and the loss from Parkdale America in the quarter.”

Unifi broke ground in July on an 85,000-square-foot addition to its Repreve Recycling Center in Yadkinville, N.C. The expansion of the facility will increase capacity to produce Unifi’s Repreve recycled fiber brand and other premier value-added products by up to 60 million pounds annually. The company said the $10 million investment will create an estimated 18 to 20 jobs in Yadkin County.

Net income for the six months declined 12 percent to $14.5 million from $16.5 million, while first half sales were off 6 percent to $318.5 million from $340 million.

Bill Jasper, chairman and chief executive officer of Unifi, said, “Despite soft U.S. holiday apparel sales and weakening China growth, our North American and China businesses grew both revenue and earnings. I expect continued growth as our strategic capital investments are brought on line in the next year or two. I also anticipate improved performance in Brazil, as we gain market share there against weaker competitors struggling in the current economic environment.”

In addition to its flagship Repreve products of eco-friendly yarns made from recycled materials, key Unifi brands include Sorbtek Reflex, Satura, Augusta and Microvista. Unifi’s yarns are found in the products of major brands in the apparel, hosiery, automotive, home furnishings and industrial markets.

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