Avgol's results in Q2 2011 improve

Avgol, a manufacturer of nonwoven fabrics for the hygiene market and the diaper industry, reports substantial improvement in its revenues and profitability during the second quarter of 2011.


The improved production efficiency, as well as the strengthening of the EUR and the CNY relative to the USD, led to sharp improvements in profit and profitability. Avgol's net profit in Q2 2011 totalled approximately USD 4.7 million – growth of 51.6% compared with net profit of USD 2.9 million in the corresponding quarter last year. Avgol's ratio of net profit to total income reached approximately 5.7%, compared with the ratio of net profit to total income of approximately 4.5% in the corresponding period last year.

According to the price-adjustment mechanism in effect between the Company and the majority of its customers, the selling prices are revised according to changes in the price of the Company's principal raw material, polypropylene, after a delay of one quarter. Avgol reports that, due to the continuing rise in the raw materials prices during the first half of 2011, the prices of the majority of the products produced by Avgol will be upwardly revised during the third quarter of 2011. As of the first quarter of 2011, prices are being adjusted on a monthly and bimonthly basis in relation to a number of Avgol's customers.

Avgol's gross profit in Q2 2011 totalled approximately USD 14.6 million, about 17.8% of the total income – growth of 29.2% compared with the gross profit in the corresponding quarter last year, which totalled approximately USD 11.3 million, when it constituted about 17.1% of the total income. The increase in the gross profit ratio was achieved mainly thanks to the improved operating efficiency at Avgol's plants, the strengthening of the EUR and the CNY compared with the USD, and thanks to the second production line in China, which contributed a higher marginal profitability. The growth in gross profit was achieved despite the rate of the rise in the raw materials prices during the quarter, which was higher than in the corresponding quarter last year.

Avgol's operating profit in Q2 2011 totalled approximately USD 7.7 million, about 9.4% of the total income – growth of 39% compared with the operating profit in the corresponding period last year, when it totalled approximately USD 5.5 million and constituted about 8.3% of the total income. The increase in the operating profit was achieved due to the Company's actions that increased production efficiency and reduced the ratio of operating expenses to sales to about 8.4% of the sales turnover, compared with the ratio of about 8.8% in the corresponding quarter last year.

Avgol's net financing expenses in Q2 2011 totalled approximately USD 1.9 million (about 2.3% of the sales), compared with a total of approximately USD 1.9 million (about 2.8% of the sales) in the corresponding period last year.
Avgol's EBITDA in Q2 2011 totalled approximately USD 12 million – a 33.3% increase compared with the corresponding period last year, when it totalled approximately USD 9 million.

Avgol Industries closed the first half of 2011 with income of USD 164.7 million, growth of 26.8% compared with the corresponding period last year. The gross profit in the first half of 2011 totalled approximately USD 32.7 million, growth of 34% compared with the corresponding period last year. The operating profit in the first half of 2011 totalled USD 18.6 million, growth of 44% compared with the corresponding period, and the Company closed the first half of 2011 with consolidated net profit of USD 11.5 million – growth of 79% compared with the corresponding period last year.

The equity as on June 30, 2011, totalled approximately USD 112.6 million, compared with approximately USD 109 million on December 31, 2010. This equity is is after the offset of the dividend totalling approximately USD 10 million, which was distributed last quarter in respect of the profits in 2010.