Quebec-based Imaflex reports lower Q2 income

Montreal, Que.-based polyethylene packaging film manufacturer Imaflex Inc. reported slower growth in the second quarter of 2007.

The company reported a net income of $103,000 for the second quarter, down by 85 per cent from $700,000 in the second quarter of 2006. Overall, Imaflex reported a total net income of $24,000 for the first six months of 2007, compared to $541,000 at the same time last year.

In particular, the company’s Canadian operations incurred a combined net loss of $730,000 for the three months ended June 30, 2007, compared with a net income of $698,000 for the same period in 2006.

“The net loss in 2007 of $730,000 is due primarily to foreign exchange losses, with the operations only achieving breakeven due to significant competitive pricing pressures in the plastics packaging industry and notable sales volume decline,” the company explained.

Imaflex also experienced operational losses at its U.S. facility of $287,000. Additionally, the company noted that it generated a significant foreign exchange gain on the translation of the integrated subsidiary of $1.1 million due to the devaluation of the U.S. dollar.

Sales for the second quarter totaled $12 million, down by 18.9 per cent from the same period in 2006. The company cited competitive pressures and a decrease in average selling prices for the difference.

The company’s management attributed the slow second quarter to flat growth and excess capacity in the plastics industry.

“Management has no clear answer as to when these difficult market conditions will reverse themselves,” they said. “However, we did envision this scenario and took decisions to position our company to not only weather this storm, but also emerge stronger.”

The company noted its decisions to convert reprocessed raw materials into finished goods and have Canslit become an integrated converting operation. Imaflex also noted that more time has been devoted to R&D activities, and said that the company is about to implement a marketing plan to take advantage of the manufacturing of a compostable plastic film.