Results of Tefron's Financial Reports for 2011: Tefron Makes a Profit in the Fourth Quarter and Closes a Positive Year
MISGAV, Israel, March 30, 2012 /PRNewswire/ --
- For the first time after 17 continuous quarters Tefron records a positive net profit in the final quarter of the year
- The company shows a net profit of approximately 0.3 million dollars in the fourth quarter against a loss of approximately 14.4 million dollars during the parallel period.
Amit Meridor, Tefron's CEO: "Tefron is investing a great deal in the development of new technologies in order to place it as a world leader in the seamless field for several years to come."
Additional Prominent Statistics for 2011:
- An increase of approximately 15.9 million dollars in the gross profit for 2011.
- An increase of approximately 9.3 million dollars in the EBITDA section in 2011.
- A reduction of approximately 85% in the operative loss in 2011.
Amit Merido, Tefron's CEO: "The results of the fourth quarter continue the trend of the substantial change which took place in the company since the beginning of 2010 and we are proud of the substantial changes in the companies gross profit and the net profit. Together with the significant improvement in the operative results, the company increased the scope of its investments in development and the sales network. The company invested in new technologies, in the promotion of the strategic merger with Cifra from Italy and in focusing resources to reinforce the company's status among its main customers. Tefron is one of the few companies in the world which supplies its customers with a basket of products which is built up from advanced developments based on new technologies. The company supplies competitive and high quality effective manufacture from Israel and at the same time since 2011 it supplies large quantities of cheap products from the Far East. Tefron's many investments in the development of new technologies and in unique collaboration place it as the leading company in the world in the seamless field for several years to come".
Arnon Teiberg, Tefron's Chairman: "The results of the fourth quarter reinforce Tefron in the path it has chosen on the way to becoming the largest and leading company in the world in the seamless field. The company's capability which it founded in 2011 to supply a range of products from the Far East, enabled Tefron to significantly increase the basket of products and solutions for customers. The company succeeded in increasing competitiveness against the main competitors who operate in the Far East while exploiting its advantages in the development of new products. Tefron invests a great deal, in particular in the field of sport, in the development of solutions and special products which will provide a special added value to the products presently existing in the sport market, and it believes that the large investment in development will reinforce its ability to increase the sales segment and improve future profitability."
Tefron's Results for the Fourth Quarter and for the Whole of 2011:
The company's sales in the fourth quarter of 2011 totaled 31.5 million dollars, an increase of 82% against 17.3 million dollars during the parallel period last year. The company's sales in 2011 totaled 118.4 million dollars, an increase of 37.6% against 86.0 million dollars in 2010.
Sales in the "Seamless" Sector
In the fourth quarter of 2011 the company recorded an increase in the rate of 81.2% in sales in the "seamless" sector, against the parallel quarter last year. During the whole of 2011 the sales in the sector shot up to 78.6% against the parallel period last year. During the reporting period the company significantly expanded its activity among customers in North America.
The gross profit in the fourth quarter of 2011 totaled approximately 4.3 million dollars (13.7% of the sales in the sum of approximately 31.5 million dollars), in comparison to the gross loss in the sum of approximately 2.5 million dollars (14.5% of the sales in the sum of approximately 17.3 million dollars) during the parallel period last year.
The gross profit in2011 totaled approximately 18.1 million dollars (15.3% of the sales in the sum of approximately 118.4 million dollars), in comparison to 2.2 million dollars (2.6% of the sales in the sum of approximately 86.0 million dollars) during the parallel period last year. The transition from gross loss to gross profit in the fourth quarter and the increase in the gross profit and the rate of gross profit for 2011 arose from the increase in sales, the application of a turnaround program and a reduction in the company's costs.
The operative profit in the fourth quarter of 2011 totaled approximately 250 thousand dollars in comparison to the operative loss in the sum of 13,892 thousand dollars in the parallel quarter last year. It should be noted that the company is recording operative profitability after 17 continuous quarters where it recorded an operative loss.
The operative loss in 2011 was reduced by approximately 85% in comparison to the parallel period and totaled 3.5 million dollars, in comparison to approximately 22.8 million dollars during the parallel period last year. The main reasons for the transition to operative profit in the fourth quarter of the year and the reduction in the annual operative loss are the success of the application of the turnaround program, the increase in sales, inter alia as a result of the Nouvelle deal, a decrease in depreciation expenses, and a reduction in administrative and general expenses.
The EBITDA section (profit before financing, tax, depreciation and reductions) in the fourth quarter of 2011 totaled approximately 1 million dollars, an improvement of approximately 5.9 million dollars against a negative EBITDA in the sum of approximately 4.9 million dollars in the parallel quarter last year.
The EBITDA section in 2011 totaled approximately a positive 2.7 million dollars, a significant improvement in the sum of approximately 9.3 million dollars against a negative EBITDA in the sum of approximately 6.6 million dollars in 2010.
The cash flow which was used for current activity in the fourth quarter of 2011 totaled approximately 1.5 million dollars, in comparison to approximately 1.0 million dollars during the parallel period last year.
The cash flow which was used for current activity in2011 totaled approximately 8.6 million dollars, in comparison to approximately 2.4 million dollars during the parallel period last year. The increase in the cash flow which was used for current activity in 2011 arose mainly from the increase in working capital requirements, mainly customers and inventory, for the purpose of financing the increase in the company's activity.
The net profit in the fourth quarter of 2011 totaled the sum of approximately 0.3 million dollars in comparison to a loss in the sum of approximately 14.4 million dollars during the parallel period last year.
The loss in 2011 totaled approximately 4.3 million dollars in comparison to a loss in the sum of 22.7 million dollars during the parallel period last year.
Events After the Date of the Balance Sheet
Cooperation Agreement with Cifra s.p.a.
On January 18, 2012 Tefron signed a cooperation agreement with the Italian company Cifra s.p.a. within the framework of which the parties would develop, design and sell to the company's customers sports products, underwear and swimwear manufactured by the seamless warp knitting technology.
To the best of the company's knowledge, Cifra s.p.a. is the leading world manufacturer in the field of seamless warp knitting and the contract with it will enable to company to market unique products to its customers while creating a competitive advantage.
The Agreement with Asia Socks for the Provision of Services and Suppliers Credit
Subject to the approval of the meeting of the company's shareholders, on February 14, 2012 the company's executive approved entering into a services agreement with Mr. Mike Gao via Asia Socks, a private company incorporated in China and which is connected to the controlling shareholders in the company. Pursuant to the agreement Mike Gao shall provide the company, via Asia Socks, suppliers tracing services, shall act as the company's buyer, and shall conduct negotiations over the price, quality and delivery dates of the merchandise. Likewise, Mr. Gao shall provide the company with additional suppliers credit days up to the sum of 4 million dollars. The company anticipates that the application of this agreement shall lead to an additional reduction in the company's purchase costs, mainly in the field of raw materials and auxiliary materials purchases and in addition to the aforesaid shall also lead to an increase in competition among the suppliers. Mr. Gao holds approximately 30% of the shares in Litef, the controlling shareholder in the company.
Tefron is a market leader in the field of clothing for customers in the United States and Europe. Tefron focuses on the development, manufacture, marketing and sale of underwear, sportswear and beachwear. Tefron's activity may be divided into to sectors of business activity: the design, development, manufacture and sale of underwear and sportswear by the "seamless" method and the design, development, manufacture and sale of underwear, beachwear and sportswear by the "cut & sew" method. Most of the design and manufacture is carried out in Israel, Jordan and the Far East while the sale of the finished products is carried out mainly in the United States and Europe.
The company's customers include the international companies: Wal-Mart, Victoria's Secret, Hanes Brands Industries, Reebok, JCP, TMGTV, Patagonia, GAP, Calvin Klein, TJMaxx.
For More Details: Dan Moses +972-52-8744809.
SOURCE Tefron Ltd