Increased demand from U.S. manufacturers for polyester and nylon wasn’t enough to offset sliding prices and tough economic conditions in Brazil as yarn producer Unifi Inc. this week revealed that its preliminary second-quarter profit fell from $9.4 million to $6.5 million, or $0.36 per basic share.
The Greensboro, South Carolina-based company said that for the three months ended December 27, net sales were $156.3 million, compared to $164.4 million in the year-ago period, and cited the Brazilian real devaluation in addition to pricing declines in the polyester segment associated with lower raw material costs, like oil.
However, Unifi said that its regional texturing business and premier value-added products performed well during the quarter and pointed out that continued growth in its Chinese subsidiary helped drive gross margin, which was 14 percent as a percentage of sales.
“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,” 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.”
Bill Jasper, chairman and chief executive, added, “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.”