Unifi has been cutting costs and SG&A expenses through a series of lay-offs and abandoning unprofitable businesses to post its second straight quarter with an operating profit. UFI also cut its fiscal Q1 net loss in half to $1.3 million compared to a loss of $2.6 million in Q1 of last year. The loss per share decreased from 5 cents last year to 2 cents in fiscal 2005.
Unifi has reduced its global workforce by 28% in the last 18 months, and in the process cut SG&A expenses from $12.4 million or 7.6% of sales last year down to $9.5 million or 5.3% of sales. Unifi also announced that the company will be laying-off more workers at their recently-acquired Kinston, NC spinning facility. The yarn plant was operating at a negative $24 million EDITDA under Invista. After synergy and rationalization savings, Unifi expects a positive $30 million EBITDA out of the facility.
The companys plans to launch operations in China have finally taken a positive step. Unifi and Sinopec Yizheng Chemical Fiber Co. Ltd. have signed a nonbinding letter of intent to launch a 50/50 joint venture in the Jiangsu province of China. Unifi will be purchasing 50% of an existing facility that is currently operating with sales of roughly $120 million. Unifi will be producing high margin specialty yarns out of the facility. They will primarily target U.S. and European companies producing textile products in China as customers and expect to grow sales to over $500 million by 2010.
