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Teejay reports Q1 net profit growth of 62-pct

Teejay reports Q1 net profit growth of 62-pct

Teejay Lanka PLC has made a strong start to 2019-20, reporting excellent top and bottom line growth at group and company level through efficient capacity utilisation, an improved product mix and effective curbing of non-strategic costs.

Sri Lanka’s only multinational textile manufacturer reported group net profit of 453.7 million rupees and net profit of 376.5 million rupees at company level for the three months ending 30th June 2019, achieving impressive growth of 62 percent and 50 percent respectively in its seventh consecutive quarter of improved sales and profits.

Group profit before tax grew by 61 percent to 581.6 million rupees and the Group paid 128 million rupees in income tax in respect of the quarter reviewed, an increase of 57 percent over the corresponding three months of the previous year.

Group revenue increased by 1.306 billion rupees or 19 percent to 8.125 billion rupees for the three months, with the benefits of economies of scale from expanded capacity continuing to kick in.

The growth of cost of sales and administrative expenses were restricted to 17 percent and 12 percent respectively, enabling Teejay to record a gross profit improvement of 35 percent and operating profit growth of 58
percent.

“These results are particularly noteworthy in the context of rising raw material prices and increases in the costs of other inputs,” Teejay Lanka Chairman Mr. Bill Lam commented. “The cost of utilities and dyes and chemicals continues to increase, stemming from world market prices. Cotton stabilised during the quarter, but the demand for the commodity is on the rise and may impact us adversely in the future.”

Despite these challenges, the Group’s internal measures and the depreciation of the Sri Lankan and Indian Rupee helped curtail expenses, enabling gross and net profit margins to improve to 11.9
percent and 5.6 percent respectively.

At Company level, Teejay recorded revenue of 4.37 billion rupees for the three months, an improvement of 7 percent, while profit before tax grew by 56 percent to 446 million rupees.

Mr. Lam disclosed that Teejay is continuing with a strong balance sheet and a net cash balance of 4.45 billion rupees, in line with the Group’s strategy of keeping the Company net debt-free, and that a final dividend of 1.10 ruppes has been proposed to be paid to all shareholders in respect of the concluded financial year.

“Teejay continues its focus on modernisation of its plants by investing in state-of-the-art machinery, which will give higher yields and reduce the impact on the environment by consuming less water and power, upholding our commitment to create sustainable value for all our stakeholders,” he added. “We have seen an upsurge of orders from our strategic customers and vendor partners and this momentum of growth is expected to continue.”

With manufacturing operations in Sri Lanka and India, Teejay is one of the region’s largest textile manufacturers, and supplies fabric to some of the best international brands across the world. Teejay Lanka PLC is a public quoted company with 39 percent of public ownership. The company is backed by Sri Lanka’s largest apparel exporter, Brandix Lanka which has a 33 percent stake and Pacific Textiles of Hong Kong which owns 28 percent of the company.