Teejay 6-month net profit up 20% to Rs. 705 m despite challenges

Teejay Lanka PLC, Sri Lanka’s only multinational textile manufacturer, has reported sales of Rs 14.4 billion and profit after tax of Rs. 704.8 million at Group level for the six months ending 30th September 2018, rewflecting healthy growth of 25% and 20% respectively for the period.

Group profit before tax improved by 15% to Rs. 848.6 million, the weft knit fabric specialist with manufacturing operations in Sri Lanka and India said in a filing with the Colombo Stock Exchange (CSE).

Revenue in the second quarter of 2018-19 was up 25% to Rs. 7.6 billion, profit before tax grew 11% to Rs. 500.2 million and net profit increased by 15% cent to Rs. 425.5 million over the corresponding three months of the previous year, the company said.

Teejay Lanka Chairman Bill Lam said this was the fourth consecutive quarter of revenue and net profit growth for the company in the face of stiff challenges, and was made possible by expanded capacity in the Group and a strong order book arising from the GSP facilities that it enjoys.

He disclosed that although margins were impacted by raw material and utility cost increases in the second quarter, Teejay had been able to improve its gross margin to 11.3% from 10.2% in the corresponding quarter as a result of better loading and an improved mix, with its USA and EU business units increasing sales volumes.

Consequently, gross profit for the Group at Rs. 859 million for the second quarter and Rs. 1.5 billion for the six months, reflected growth of 15% YoY after absorbing higher utility and raw material costs and the depreciation of the rupee, Lam said.

The Teejay Group has a carried forward cash balance of Rs. 3.4 billion at the end of the quarter reviewed despite a dividend payment of Rs. 632 million. “The increase in working capital was driven by inventories to support expanded capacity and a strong order book in the coming quarters which have historically been the Group’s peak months,” Lam said.

Looking ahead, he said cotton price volatility is expected to ease out towards the end third quarter while utility costs and the prices of dyes and chemicals are projected to increase.  Amidst these challenges, the Group is gearing up for its peak quarters with the GSP benefit, an anticipated surge in EU business, a strengthened customer portfolio, plans to bring in more business and fully exploit its expansion in India in the second half of the financial year. 

One of the region’s largest textile manufacturers, Teejay supplies fabric to some of the best international brands across the world. Teejay Lanka PLC is a public quoted company with 39 per cent public ownership. The company is backed by Sri Lanka’s largest apparel exporter, Brandix Lanka which has a 33% stake and Pacific Textiles of Hong Kong which owns 28% of the company. An ISO 9001:2015, ISO 14001:2015 and OHSAS 18001:2007 compliant company and the first in the industry to develop green fabric, Teejay has been listed on the Colombo Stock Exchange (CSE) since 2011 and was included in the S&P Top 20 Index in Sri Lanka last year. 

The company has also been named among the Forbes ‘200 Best under a Billion in Asia’ and been recognised as the ‘International Textile Firm of the Year’ and the ‘International Dyer and Finisher’ by World Textile Institute, London.