Six months after laying-off 700 employees at its loss-making Bagir plant, Polgat reported that its second quarter net profit was 50% higher than in the first.
Polgat's second quarter net profit was NIS 9.2 million, compared with NIS 6.1 million in the preceding quarter and a loss of NIS 11.2 million in the corresponding quarter in 2001. Quarterly revenue rose to NIS 194 million, compared with NIS 165.7 million in the preceding quarter and NIS 168.6 million in the second quarter of last year. Polgat attributes the increased sales to improved revenue by Bagir.
Polgat's overseas sales in the first half of 2002 were $73.1 million, compared with $68.6 million in the corresponding period last year. Overseas sales in the first half of the year accounted for 96.8% of total sales, compared with 95.5% in the first half of 2001.
Second quarter gross profit was NIS 49.2 million, compared with NIS 35.5 million in the first quarter and NIS 22.3 million in the corresponding quarter last year. The second quarter gross profit ratio was 25.3% of sales, compared with 13.2% in the corresponding quarter last year. Polgat attributes the improved ratio to increased production outside Israel, i.e. Polgat's transfer of Bagir production from Israel to Egypt.
In addition to Bagir, Polgat's activities also include Guney-Polgat in Turkey, in which Bagir has a 45% stake, with the rest held by the Turkish company. The two companies merged textile production and marketing. Polgat's share of Guney-Polgat's first quarter profit was NIS 6.9 million. Polgat has also expanding its operations in Egypt and Jordan.
Polgat's main export markets are the UK and US. Its main customer is British fashion chain Marks and Spencer, which accounts for almost half Polgat's sales. Polgat stated that its British operations consisted of both direct sales from Israel and through warehousing, marketing and distribution subsidiaries. In the US, Polgat operates through a sales subsidiary.
Polgat reported that textile production in Israel is facing an increasing threat from the transfer of tailored clothing production from the EU to Eastern Europe, North Africa and Jordan.
Published by Globes [online] - www.globes.co.il - on August 18, 2002