Michael F. Barry, Chairman, Chief Executive Officer and President, commented, "We are pleased to report solid results in the first quarter given the challenging global economic environment. We generated good cash flow and our gross margins are continuing to return to more acceptable levels. Our market share gains and acquisitions have helped us to have relatively stable volumes and revenues despite weak conditions in numerous parts of the world, especially in Europe.
Mr. Barry concluded, "Going forward, we believe we will continue to face challenging market conditions around the world with Europe continuing to be the most pronounced. We do, however, remain optimistic about our future and expect 2013 to be another good year for Quaker."
First Quarter of 2013 Summary
Net sales for the first quarter of 2013 were $176.2 million, a decrease of less than 1% from $177.6 million in the first quarter of 2012. Foreign exchange rate translation decreased revenues by approximately $2.2 million, or 1%, which was partially offset by a slight increase due to selling and price mix of less than 1%. Product volumes, including acquisitions, were consistent in the first quarter of 2013 compared to the first quarter of 2012.
Gross profit increased approximately $2.8 million, or approximately 5%, from the first quarter of 2012. The increase in gross profit on consistent sales was due to an improvement in gross margin to 35.5% compared to 33.7% for the first quarter of 2012 and 34.2% for the fourth quarter of 2012. The increase in gross margin is reflective of the Company's continuing initiative to restore its margins to more acceptable levels.
Selling, general and administrative expenses increased approximately $2.1 million compared to the first quarter of 2012, primarily related to increases due to acquisitions, higher incentive compensation and higher selling, inflationary and other labor related costs which were partially offset by a decrease in foreign exchange rate translation.
The decrease in interest expense was due to lower average borrowings and lower interest rates experienced in the first quarter of 2013 as compared to the first quarter of 2012.
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