Medical Action Industries reports 2Q income slide: MDIC says China labor costs, rise in fuel prices contributed to problem

Thu. November 06, 2008; Posted: 01:09 PM

Nov 06, 2008 (Newsday - McClatchy-Tribune Information Services via COMTEX) -- MDCI | Quote | Chart | News | PowerRating -- Still struggling against higher costs, Medical Action Industries Inc., one of the nation's largest suppliers of disposable medical products, said Thursday net income fell sharply in its fiscal second quarter, which ended Sept. 30, compared to the same period last year, but that sales rose.

The Oceanside-based company said that it earned $480,000 in its latest quarter, compared with earnings of $3.2 million in the same period last year.

Sales in the latest quarter, however, were $73.8 million, compared with sales of $72.2 million in the same period a year ago.

Medical Action said it earned 3 cents in the latest quarter, compared with EPS of 21 cents a year ago.

Medical Action chief executive Paul D. Meringolo said in a statement before markets opened Wednesday that the company continues to be challenged by higher prices for resin, increased costs for goods produced in China, and the efficiency of a plant in Tennessee.

Meringolo said that the company has recently seen declines in resin prices, but that they will not benefit Medical Action until the fourth quarter as a result of purchases made in June and July of this year at higher than current market prices.

"Volatile oil prices, higher Chinese labor costs and currency fluctuations have had a significant impact on the entire medical products industry," Meringolo said. "We'll continue to monitor those factors and their potential effect on future performance."

Shares of MDCI fell 60 cents Wednesday, to close at $10.72. They are off 48 percent this year.

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