Profitability improved significantly over the prior year with first quarter gross profit up 22.7% to $52.6 million, representing a gross profit margin of 23.2% compared to 15.7% for the first quarter of 2008. Operating income for the quarter was $22.2 million, 83% higher than the prior year period, and net income attributable to PGI was $9.6 million compared to $1.4 million in the first quarter of 2008.
During the month of April, the company completed the installation of its state-of-the-art spunmelt line in Mexico to serve the North American hygiene and medical markets.
In the Nonwovens segment, volumes declined $18.4 million, predominantly in the U.S. and Europe. The sales volume declines in the U.S. and Europe were primarily due to a U.S. plant closure in the third quarter of fiscal 2008, and recessionary impacts that are negatively affecting the industrial and wiping businesses located in the U.S. and European regions. However, U.S. nonwoven roll goods volume in the industrial markets was up 5% in aggregate year-over-year. This was the net result of a 54% increase in spunbond industrial volumes and a 46% decrease in fiber-based product volumes representing the company’s efforts to improve its profit profile in the U.S. industrial markets and develop new applications for existing technology.
Sales in the Nonwovens segment were also negatively impacted by lower selling prices of $11.9 million primarily due to price decreases resulting from the pass‑through of lower raw material costs. The Oriented Polymers segment sales volumes were lower by $8.6 million and continued to be negatively impacted by reduced housing starts affecting the segment’s industrial business, imported commodity products affecting lumberwrap volumes, and recessionary impacts.
“PGI started 2009 in a very positive way,” said PGI’s CEO Ronee Hagen. “We previously stated that we expected a strong first quarter and our results were ahead of expectations. We were able to fully benefit from the volatility of the raw material markets even in a tough economic environment. Our consumer disposable volumes were relatively stable during the quarter with the most significant impacts seen in the industrial markets as expected. While we do not anticipate sustaining the margins achieved in the first quarter, we still expect the remainder of the year to show solid results.”
“We continued to position ourselves for leadership with the completion of the installation of our new, state-of-the-art capacity at our plant in San Luis Potosi, Mexico. This strategic investment will enable us to better serve customers throughout North America in the hygiene and medical markets. Our operation in Mexico has a strong track record of successful capacity start-ups as evidenced by the contributions from the latest line installed in 2004. We will continue to build on our capabilities to provide customers the best value proposition in the industry as we focus on both internal core processes and new product deliveries in 2009.”