Intimate apparel maker Delta Galil Industries Ltd on Wednesday (14 March) said it swung to a profit in the fourth quarter and full year, but warned that price erosion and increased competition are likely to lead to more restructuring measures.

Net income in the fourth quarter of 2006 was $0.4m, or $0.02 diluted earnings per share, compared to a loss of $7.6m, or $0.41 diluted loss per share, in the same quarter of the previous year.

Quarterly revenues rose 2.3% to $174.1m, from $170.2m last time.

The Tel Aviv-based company, which makes private label intimate apparel, socks, babywear and leisurewear, added that profit for the full of 2006 was $3.1m, or $0.17 per share, compared to a loss of $36.3m, or $1.94 per share, in 2005.

Excluding restructuring expenses and impairment of assets and goodwill, full-year net income was $4.8m, or $0.26 per share, compared to a loss of $15.6m, or $0.83 per share.

Year-on-year revenues rose 3.2%, from $684.5m to $706.7m.

Mr Aviram Lahav, Delta's CEO, said the company's 2006 results benefited from a restructuring plan initiated in 2005.

This involved the reorganisation of the company's Far East activities in the second quarter of 2006, including the closure of the Delta sewing plant in China in response to the re-imposition of quotas on some Chinese exports.

The company also decided to focus its Chinese operations on procurement of finished goods and raw materials, and product development, and to concentrate Far East self-production in Thailand.

"Nevertheless", Lahav added, "continued erosion in selling prices and increased competition necessitate further organisational restructuring and cost cutting measures.

"Therefore, during 2007, Delta plans to further modify its organisational structure and to implement additional actions designed to improve the company's competitive capabilities and performance."

Delta Galil produces for brands such as Calvin Klein, Hugo Boss, Nike and Ralph Lauren, as well as private label retailers including Wal-Mart, Marks & Spencer, Target, Victoria's Secret, and JC Penney.

The company operates manufacturing facilities in Israel, Jordan, Egypt, Turkey, Eastern Europe, Central America, the Caribbean and the Far East.