Intimate apparel, underwear and leisurewear manufacturer Delta Galil Industries Ltd on Tuesday said its third quarter profit dropped by 16 per cent to $5 million, from $6.0m in the same period last year.

Third-quarter operating profit at the manufacturer whose customers include Calvin Klein, Nike, Marks & Spencer, Target, Wal-Mart, Victoria's Secret, and Gap fell 4 per cent to $8.7m, compared to $9.1m in the third quarter last year.

Sales were up 19 per cent to $176.5 million, from $148.7 million in 2003's quarter the Tel Aviv-based company said.

Net income for the first nine months of 2004 fell 31 per cent to $12.9m from $18.7m. This figure incorporates capital gains net of reorganisation expenses of $3.1m.

Operating profit in the first nine months decreased 24 per cent to $22.0m, versus $29.0m in the first nine months of 2003. Nine-month sales rose 14 per cent to $487.1m.

The company said the sales increase was due to growth in the North American, European and Israeli markets, as well as the consolidation of the Auburn Hosiery Mills business which Delta acquired in the fourth quarter of 2003.

Arnon Tiberg, Delta's president and chief executive officer said: "The increase in sales for the period was in line with our expectations."

However, he added that Delta's fiscal 2004 results are likely to be lower than those forecast at the beginning of the year.

Delta Galil operates manufacturing facilities in Israel, Jordan, Egypt, Turkey, Eastern Europe, North and Central America, the Caribbean and the Far East.