The first quarter of 2007 was characterized by an international upturn in the demand for denim fabrics, the Company's main product. This resulted to an increase in the Parent Company's sales by 16% in comparison with the correspondent quarter of 2006. Market feedback for the current year's second quarter shows a further strengthening of this trend.
The positive contribution of denim fabrics was not enough to counterbalance the loss in the consolidated turnover and efficiency. Its two cotton-ginning mills faced one of the worst cotton seasons of the last twenty years, mainly due to unfavorable weather conditions during harvest. This resulted to increased production cost for ginned cotton.
Based on the consolidated financial statements for the first quarter of 2007, turnover amounted to Euro 21.30 mln, in comparison to Euro 24.50 mln of the previous quarter, mainly due to reduced realized cotton sales this year. Profit before tax, interest and depreciation (EBITDA) amounted to Euro 0.57 mln, influenced by the negative ginning mills' efficiency, the higher raw material cost and the sale of old stock at low prices, while profit before tax amounted to Euro -1.71 mln compared to Euro 1.57 mln. Moreover, net profit after tax and minority rights decreased from Euro 1.00 mln in the first quarter of 2006 to Euro -1.13 mln in the first quarter of 2007.
Shareholder's equity amounted to Euro 80.67 mln from Euro 81.80 mln at the end of 2006, shaping the Debt-equity ratio to 1.08 thus sustaining a strong Group financial structure. Moreover, Earnings per share ratio amounted to Euro -0.08 from Euro 0.07 in comparison with the first quarter of 2006. Finally, "Price to book value" ratio (P/BV) amounted to 0.43, while the ratio capitalization to sales amounted to 0.44.
On a consolidated basis, investments on fixed assets for the first quarter of 2007 amounted to Euro 2.05 mln, mainly related with the expansion of production capacity for the production of new products. By the end of the current year, part of the weaving looms is scheduled to be replaced with new ones of latest technology, a total cost of Euro 1 mln.
HELLENIC FABRICS S.A. is a modern enterprise with vertical structure, modern mechanical equipment and know-how related to the denim fabrics. At the same time, it has an extensive sales network, excellent reputation and recognizable name in the international market, due to its close collaborations with the most important brand jeans' manufacturers.
The Group's Management estimates that the cyclical movement in the denim market has already reached its lowest level. Increased sales, in combination with the gradual upturn in the denim market noted in the first and second quarter, will lead to the improvement of the Group's efficiency.