(Filed Under Financial and General Interest News). Tefron, the seamless producer based in Israel, reported improvements in its “net profit in the second quarter and first half of 2012 and first positive quarterly cash flow in six quarters,” according to a company statement.
In a summary of financial highlights, Tefron noted, “Operating profit in the second quarter of 2012 totaled $149,000 in comparison to operating loss in the amount of $1.3 million in the corresponding period last year . EBITDA in the second quarter of 2012 totaled $1.6 million compared to $0.5 million in the corresponding period last year. Net income for second quarter of 2012 totals $1.3 million, or 20 cents diluted earnings per share including a tax benefit of $1.1 million, compared to a net loss of $1.7 million in the same period in 2011. Cash flow from operating activities for the second quarter totaled $3.2 million, compared to a negative cash flow of $1.5 million in the second quarter of 2011. Operating profit in the first half of 2012 totaled $256,000 in comparison to operating loss in the amount of $3.2 million in the corresponding period last year.”
The company also stated that “EBITDA in the first half of 2012 totaled $3.0 million in comparison to $0.8 million in the corresponding period last year. Net income for the first six months of 2012 totaled $477,000, or 7 cents diluted earnings per share compared to a loss of $4.0 million in the first half of 2011. Cash flow from operating activities totaled $0.6 million in the first half of 2012 compared to negative cash flow of $9.2 million in the first six months of 2011.”
Commenting on developments at Tefron in the period, Amit Meridor, Tefron’s CEO said: “In the second quarter of 2012, Tefron recorded an increase of 22.2% in the seamless apparel sector sales. This very positive operational result, as well as the stronger financial results we reported are a direct outcome of the large scale investments that we have made at Tefron over the past two years, particularly in the development of new products and the improvement in product mix. These important investments, combined with our advance production capabilities in Israel and more recently established production operations in China, have enabled Tefron to offer a full and competitive basket of solutions to customers and to solidify our position as the global leader in seamless technology.”
Meridor continued, “During Tefron’s recent turnaround period, we have made major improvements in production efficiencies and, equally important, we have worked to establish a culture of streamlining costs at all levels. These efforts have allowed us to stay competitive and turn a positive operating profit and net profit despite the increase in the price of raw materials and additional costs. Moreover, we have not stopped in our efforts to secure our competitive position and we are currently conducting negotiations with a Chinese partner in order to establish and expand the company’s supply and production resources. This is a major and important strategic step in the company’s future that will allow us to maximize profitability with increased production capabilities and a competitive cost structure from East Asia that is under the company’s control. This will also allow our local management to focus more time and resources in the development of advance product lines at the development center in Israel.”
Arnon Teiberg, Tefron’s chairman added, “Tefron’s success lies in its ability to leverage the company’s impressive technological legacy in its sector to further lead the global engineered seamless apparel industry with more advanced technologies and products to meet ever more demanding customer requirements. The cooperation agreements that Tefron signed in the first half of 2012 are significant milestones in establishing a global production and distribution network, thereby strengthening Tefron’s position as the worldwide leader in the engineered seamless apparel industry.”
Sales in the first half and second quarter of 2012 both increased over the previous year. According to the Tefron statement, “sales in the second quarter of 2012 totaled $29.3 million, a 1.4% increase in comparison to $28.8 million in the corresponding period last year. The company’s sales in the first half of 2012 totaled $57.6 million, a 1.5% increase in comparison to $56.8 million in the corresponding period last year.”
In addition, according to Tefron, “in the second quarter of 2012 the company recorded an increase of 22.2% in the “seamless” sector sales in comparison to the corresponding period last year. This increase mainly derives from continuation of the company’s sales efforts that leveraged sales to clients that were absorbed in the Nouvelle transaction and continued with the strategic success in penetrating mass markets in North America. To the best of the company’s knowledge, the sales in the seamless segment positions Tefron as one of the global leaders in the seamless sector.”
“Net income in the second quarter of 2012 totaled $1.3 million, or 20 cents diluted earnings per share compared to a loss in the amount of $1.7 million during the corresponding period last year.” For the first half of 2012 net income “totaled $477,000, or 7 cents diluted earnings per share compared to a loss of $4.0 million during the corresponding period last year. “
The company statement described two recent transactions. “In January 2012 the company signed a cooperation agreement with the Italian Cifra S.P.A company that, to the best of the company’s knowledge, is the leading player in the seamless warp knitting sector – a seamless knitting technology. In the framework of cooperation, Cifra and the company will jointly develop and design seamless warp knitting products in the sports, underwear and swimwear sectors “
In the second transaction, Tefron entered into “An agreement for services and providing suppliers’ credit with Asia Socks On February 14, 2012 the company’s board of directors granted its approval, followed by the company’s shareholders’ approval in a meeting convened on April 4 2012, and also approved the company, to enter a service agreement with Mr. Mike Gao through Asia Socks Inc. Company and/or through any other company owned by Mr. Gao. In accordance with the agreement Mr. Gao will provide the company, through Asia Socks, tracing services in connection with raw materials and products and/or subcontractors and supervision and consultation services that include the provision of suppliers credit to the company for a period of three years. The company expects that the execution of this agreement will result in further decrease of the company’s procurement costs especially in the procurement of raw materials and auxiliary materials and, in addition to the said, will increase competition among suppliers.”
Tefron describes itself as “s a market leader in the field of apparel, serving customers in the U.S. and Europe. Tefron focuses on developing, producing, marketing and selling undergarments, athletic wear, beach and swimwear. Tefron activities are divided into two business segments: “Seamless” design, development, production and sale of intimate apparel and active wear; and “cut and sew” design, development, production and sale of intimate apparel, swimwear and active wear. The design and production are mainly performed in Israel, Jordan and the Far East, while the finished goods are sold mainly in the U.S. and Europe. Company customers include leading international players, such as: Victoria’s Secret, Hanes Brands Industries, Reebok, Patagonia, GAP, Calvin Klein and Wal-Mart.”
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