Unifi Inc. reports a decline in recycled polyester fiber sales but sees growing demand for PET flake and chip products in the first quarter of fiscal year 2023.
Unifi Inc., a leading PET recycling company known for its Repreve brand of recycled polyester fiber, recently reported a decline in net sales during the first quarter of its fiscal year ending October 1, 2023. Despite facing challenges in the recycled polyester fiber market, the company is witnessing increased demand for its PET flake and chip products.
During this quarter, Unifi’s net sales amounted to $138.8 million, marking a 29.0% year-over-year decrease. The dip is attributed to reduced sales volumes resulting from inventory destocking and cautious ordering patterns observed within the apparel industry. These factors, in conjunction with lower average selling prices due to decreased raw material costs, contributed to the company’s net loss of $13.3 million for the quarter, compared to $7.8 million in the same period the previous year.
Unifi CEO Eddie Ingle acknowledged the ongoing challenges, stating, “Our performance in the first quarter of fiscal 2024 reflects a continuation of the weak demand and depressed ordering patterns impacting the apparel industry and its supply chains.”
Industry Developments in Recycled Polyester
While recycled polyester fiber sales faced a decline, Repreve products still accounted for about 31.0% of Unifi’s revenues during the quarter, showing a 4.0 percentage point improvement year over year. Executives emphasized their commitment to growing sales of recycled PET flake and chip, highlighting the potential for non-textile and beyond-apparel applications.
A.J. Eager, the company’s treasurer, noted during a conference call with investors, “We do see a lot of interest with customers in terms of some of the non-textile and beyond-apparel applications” for recycled PET flake and chip. Ingle added that the company believes its RPET chip has quality attributes that the market appreciates, expressing optimism about the successful diversification of their product portfolio.
Advanced Drainage Systems (ADS), the largest recycled plastics user in the U.S., announced plans to construct a pipe manufacturing facility in Lake Wales, Fla., emphasizing its commitment to eventually utilizing recycled resin in production. The company’s financial results for the quarter ending Sept. 30, 2023, showed net sales of $780.2 million, down 11.8% year over year, with net income at $137.0 million, down 10.7% year over year.
Unifi’s Pursuit of Growth Strategies
In contrast, Trex, a manufacturer of recycled polyethylene composite lumber products, experienced significant sales growth during the quarter, reporting $304.0 million in sales, a 62.0% year-over-year increase. Net income for Trex surged to $65 million, up 364.0% year over year. The company attributed this boost to increased volume driven by strong secular trends and the absence of channel inventory drawdown seen in the previous year.
These contrasting performances across the recycling industry reflect the complex dynamics within the market, with Unifi actively seeking avenues for growth amidst challenges in recycled polyester fiber sales. The commitment to diversification and the positive reception of PET flake and chip products present a promising trajectory for Unifi’s future revenue opportunities.