For the first six months of fiscal 2008, net income improved to $3.8 million versus the 2007 amount of $1.5 million. Year-to-date sales were $564.6 million, up $26.6 million, or 4.9%, from the same period in 2007. Increases in selling prices attained to mitigate the impact of raw material cost increases was the largest contributor, accompanied by higher volumes in Latin America and Asia and favorable foreign currency translations.
According to PGI, underlying volumes in the U.S. were solid as new industrial programs continued to come online and hygiene demand remained strong. Additionally, volumes were higher in Latin America as the new line in Argentina ramped up during the quarter, and in Asia as the company's new facility in Suzhou continued to improve compared to the prior year, along with higher hygiene volumes from the specialty chemical bond line at its Foshan, China location.
Raw material costs, specifically, polypropylene, increased significantly during the quarter. These cost increases were greater than the increase in selling prices that the company was able to achieve during the same period. As such, profit levels were negatively impacted. The improvement in gross profit was driven primarily by improvements in product mix and lower manufacturing costs in the nonwovens segment, offset by higher raw material costs in excess of selling price increases, start-up costs associated with capacity installations and lower volumes from consolidated operations. Additionally, depreciation expense was lower in the second quarter of 2008 compared to the second quarter of 2007.
PGI's CEO Ronee Hagen, stated, "The underlying performance of the majority of our nonwovens business has been strong. Our business in Asia has improved significantly during the year as high value medical volumes have increased and our U.S. business has improved through new product development and exceptional operating efficiencies.” She added that PGI’s industrial business in Europe has remained strong and the company has continued to grow cable volumes. She also said that these improvements have been tempered somewhat by start-up issues in Latin America associated with the Reticulon line in Mexico, the new spunbond line in Argentina and the intensely competitive environment that exists in South America due to new capacity installations into the market. “The Oriented Polymers segment has been relatively stable for the first half of 2008 after a tumultuous second half of last year,” she said.