Gildan ActivewearInc. has posted record fourth-quarter financial results thanks to lower cotton costs, a more favourable product mix and higher selling prices for its branded apparel, among other factors.
The Montreal-based company is also expanding U.S. production for the first time by investing $85-million (U.S.) on yarn-spinning facilities in southern states, the maker of T-shirts, socks and other clothing said Thursday.
The plants will employ hundreds of workers who will make yarn that will be transformed into clothes at Gildan’s low-cost centres in other countries and exported to the United States duty-free.
Gildan expects to hire about 200 additional workers at a new facility that will be built next year to make soft ring spun yarn. They will join 230 employees at two facilities in Georgia and North Carolina that it owns after taking full control of a joint venture earlier this year.
The investment in U.S. manufacturing comes several years after it close its high-cost apparel manufacturing in Canada and the United States and shipped jobs to Central America and the Caribbean.
This investment will allow the company to establish its only U.S. manufacturing and take advantage of low electricity prices and technological expertise, says chief financial and administrative officer Laurence Sellyn.
“This will be our first manufacturing major investment in the U.S.,” he said in an interview.
“Yarn is the first step in the supply chain that consumes the raw cotton so it is good to do close to the raw material.”
Ring-spun yarn is a softer material used in underwear and T-shirts that’s typically imported from Asia at a higher price. By making the yarn in-house, Gildan will develop closer relationships with farmers and produce a material that fetches a higher price.
It will also be able to take advantage of the Central America Free Trade Agreement that allows the importation duty free of finished goods made from yarn spun in the United States or Central America.
Gildan reported on Thursday that it booked net profit of $89-million (U.S.) or 73 cents per share, compared with profit of $48.5-million or 40 cents per share in the year-earlier period.
Revenue was $561.7-million, up 16.6 per cent from $481.6-million a year ago.
The company is increasing its quarterly dividend by 20 per cent, or 9 cents a share, starting with a payout on Jan. 7 for shareholders of record as of Dec. 13.
Excluding restructuring and acquisition costs, profit was $94.9-million or 78 cents per share, compared with $52-million or 43 cents in the year-earlier period.
The company also said it has clinched major new branded programs with national retailers for fiscal 2013. The programs include underwear, socks and activewear.
Gildan said another reason for its impressive fourth-quarter performance was the initial accretion from the acquisition earlier this year of environmentally friendly t-shirt maker Anvil Holdings Inc.
The fourth-quarter restructuring and acquisition-related costs were $5.9-million after-tax and were primarily related to the writedown of real estate assets held for divestiture since the closing of U.S. sock manufacturing operations, and severance costs as a result of the integration of acquisitions.
Gildan also said it expects first-quarter adjusted profit of between 28 cents and 31 cents per share.
For the full-year of fiscal 2013, the company provided guidance for adjusted profit of between $2.60 and $2.70 per share.
Revenue for fiscal 2013 is forecast to be in the $2.1-billion range, the company said.
With files from The Canadian Press.