Polymer Group, Inc.’s net sales were $291.5 million for the second quarter of 2013 compared with $296.2 million for the second quarter of 2012. The decrease in net sales was primarily driven by lower net selling prices of $3.2 million, primarily in the Americas and Europe, reflecting raw material trends and a competitive pricing environment. The decrease was partially offset by favorable foreign currency impacts of $1.2 million resulting from higher translation of sales generated in foreign jurisdictions, particularly inEurope and Asia.
Overall volume in the Nonwoven segments decreased $0.2 million, compared with the three months ended June 30, 2012. Incremental growth of $5.7 million in Asia was primarily driven by higher volumes sold in the Healthcare market from the new spunmelt line installed in 2011. In addition, PGI completed the installation of its manufacturing line in May 2013, which will provide additional capacity in the Hygiene market in Asia. Volumes were lower in the Americas and Europe, impacting sales by $5.9 million, a result of an increased competitive environment and certain inventory and market-based adjustments within the hygiene customer base. However, the volume reduction was partially offset by increased sales of wipes and industrial products as demand increased with overall markets.In addition, net sales in the Oriented Polymers segment decreased $1.5 million due to lower demand in the industrial markets partially offset by improved pricing.
Gross profit was $50.4 million for the second quarter of 2013 compared with $46.4 million for the second quarter of 2012. As a result, gross profit as a percentage of net sales increased to 17.3% from 15.7% for the respective periods. The increase in gross profit was primarily driven by higher net spreads (the difference between the change in raw material costs and selling prices) of $6.5 million. In addition, PGI’s new spunmelt lines in Asia, as well as improved manufacturing efficiencies, contributed incremental gross profit during the quarter. However, gross profit was impacted by higher manufacturing costs primarily associated with certain volume-related manufacturing inefficiencies, particularly in the Americas. These costs were partially offset by the positive benefits of our cost improvement initiatives implemented during 2012.
Operating income for the second quarter of 2013 was $8.3 million compared with $2.6 million for the second quarter of 2012 and $9.4 million for the first quarter of 2012. The overall increase in operating income was primarily driven by higher net spreads. The company reported a net loss of $7.9 million for the second quarter of 2013 compared with a net loss of $12.1 million for the second quarter of 2012 and a net loss of $6.2 million for the first quarter of 2013.
“The solid business fundamentals we have cited for some time were once again evident in the sequential improvement in revenue and profitability,” says PGI’s CEO J. Joel Hackney Jr. “Our strategy is to maintain economic leadership and leverage the growth in all segments, and I’m pleased with the execution and commitment demonstrated across our global platform. We have sustained momentum from favorable demand trends in Asia and stabilization in several end markets in the Americas and Europe.