Hurt by high raw material prices and low demand in the apparel sector, Unifi Inc., a manufacturer of multifilament polyester and nylon textured yarns, reported its first quarterly loss in two years but said the outlook is brighter.

The company reported a net loss for second quarter ended Dec. 25 of $7.6 million, or 38 cents a share, compared with net income of $5.4 million, or 27 cents a share, for the same period a year earlier.

Net sales for the three months increased 3 percent to $167 million compared with a year earlier. The company said higher sales prices related to mix enrichment and raw material inflation offset unit volume softness caused by inventory destocking across the apparel supply chain.

Unifi’s fibers are used in the apparel, legwear, sewing thread and home furnishings industries, as well as in a variety of industrial sectors.

“While I am disappointed we are reporting our first quarterly loss in over two years, I am pleased with our ability to generate cash despite historically high raw material prices and weak demand,” said Bill Jasper, chairman and chief executive officer of Unifi. “Although we believe there is still some excess inventory within the supply chain, we expect the effects of the destocking to be significantly less in the company’s third fiscal quarter and are encouraged by the volume improvements we have seen since returning from our holiday shutdown period. We are also encouraged by the easing of polyester raw material prices from record highs at the beginning of the December 2011 quarter. With stronger volumes and improved conversion margins from raw material price reductions, we expect to see continued improvement as we move through the second half of the 2012 fiscal year.”

For the first half, the company reported a net loss of $7.3 million, or 36 cents a share, compared to net income of $15.6 million, or 78 cents a share, for the prior-year period, as sales were up slightly to $338 million in the period. Adjusted earnings before interest, taxes, depreciation and amortization were $7.3 million in the quarter and $15.5 million for the first half of fiscal 2012, compared to $15.7 million and $34.1 million for the respective periods of fiscal 2011.

“We are beginning to see signs of improvement in the Brazilian textile market, which should improve our future results there,” Jasper said. “We are also encouraged by customer response to our expansion of texturing capacity in Central America.”

He noted that Unifi’s Repreve brand of recycled polyester has continued to gain market acceptance with new high-profile programs such as the recent announcement that Ford will be the first automaker to use the brand in seat fabric for their all-new Focus Electric vehicle

“As these and other positive trends continue to develop, we remain confident we are on the right path and will stay focused on executing our strategies,” Jasper added.

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