US yarn manufacturer Unifi has delivered its sixth consecutive quarter of sales growth in its first-quarter but saw earnings slump, weighed down by raw material costs.
Net income amounted to US$1.8m in the three months ended 30 September, from $9m a year earlier. Earnings were adversely impacted by comparatively higher operating expenses, $2.9m less in pre-tax earnings from Parkdale America and a higher effective tax rate.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
Gross margin narrowed to 11%, compared to 14.2% for the first quarter of fiscal 2018, due to higher costs, including raw materials, and a less favourable sales mix.
Net sales, meanwhile, were up 10.6% to $181.6m. Excluding the impact of foreign currency translation, sales were up 14.6%.
Revenues from premium value-added products grew 10.1%, representing around 43% of consolidated net sales.
“We continued to execute on our strategy of driving sales with our PVA portfolio as our team delivered its sixth consecutive quarter of sales growth,” said CEO Kevin Hall. “Our PVA portfolio, including the sustainable Repreve platform, continues to distinguish us in the global market.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData“While we are proud of our overall sales growth, profitability fell below expectations as raw material costs rose again. Similarly, profitability for the Parkdale joint venture fell below expectations due to higher cotton costs. We saw sales benefit from our recently acquired dyed business and remain upbeat on the outlook for this venture even though we are incurring some short-term integration costs.”
For the full year, Unifi is forecasting mid-single-digit percentage growth for operating income and adjusted EBITDA, assuming an improving price to raw material cost relationship.
