Seamless intimate apparel and activewear maker Tefron Ltd has swung to a fourth quarter loss, blaming the weak US dollar and manufacturing problems in its Hi-Tex division.

Net loss for the quarter was $2.4m, or $0.11 per share, compared with net income of $4.7m, or $0.22 per share, in the same period last year.

Revenues fell 22.2% to $38.9m from $50.0m on lower sales of active-wear to Nike, and intimate apparel to Victoria's Secret.

Fourth quarter gross margin dropped to 5.4% from 22.2% in last year's quarter on exchange rate fluctuations, and a higher sales of cut and sew garment which have a lower profitability than seamless products.

The company also said it faced continuing manufacturing challenges in its Hi-Tex division which makes "various new and complex products" ordered in short production runs.

For the full year, net income was $483,000, or $0.02 per share, compared with $18.4m, or $0.89 per share, in 2006.
Revenues were $158.6m, down 15.7% on the previous year's $188.1m. Full year gross margin fell to 12.3 from 22.8%.

Mr Yos Shiran, chief executive officer, said the company expects tough conditions "to continue into the early part of 2008."

He added: "In the short term, we will focus our efforts on solving the manufacturing challenges in our Hi-Tex division and aim to reduce operational costs. At the same time, we will continue our efforts to broaden our customer base."

On the upside, he said active-wear revenues are growing and first quarter sales look strong.