Volatile Energy Prices Could Impact Textile Services Market

Posted April 2, 2015 at 4:15 pm

“Why would a supplier of uniforms and protective clothing to businesses in North America and Europe be concerned about low oil prices?” asks The Street, a website that reports on financial news. The website recently took a look at the effect that falling oil prices are having on textile services companies.

Value and patience are the words on The Street regarding TRSA-member operator UniFirst Corp., Wilmington, MA. Continued weak oil prices have put pressure on the company’s numbers for the balance of 2015, according to the report. About 10% of UniFirst’s customer base is in the energy industry, and low oil translates into layoffs. Second-quarter earnings results are down close to 3% year to date, but up 10% over the past 52 weeks.

UniFirst CEO Ronald Croatti says the company is “cautious in our outlook as a result of our significant presence in energy-producing regions in the U.S. and Canada. We believe that if oil prices remain depressed, our operating results will be negatively impacted."

While lower oil prices support cost savings on fleet fuel, which helped UniFirst’s first-quarter operating margin rise to 16.9% from 16.8%, its special-garments segment revenue declined 8% year over year to $22.5 million. UniFirst saw a decline in its power reactor business as well, with a drop in profit of 18% compared to last year.

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