JAT Holdings posts highest-ever revenue for 1Q amidst economic crisis

• Achieves revenue growth of 39% and gross profit growth of 37%
• Highest-ever PAT for 1Q
• Secures over eight months of raw material as inventory for uninterrupted production  
• Starts manufacturing operations in Bangladesh under fully owned subsidiary, Asia Coatings
• Financial relief schemes provided to safeguard employees 

Founder and Managing Director Aelian Gunawardene

Chief Executive Officer Nishal Ferdinando

Guided by its highly experienced and skilled corporate management team, JAT Holdings PLC has achieved its highest-ever first-quarter revenue in FY 2022/23. The Group has also performed exceptionally well, across a range of other financial performance indicators, defying industry trends, amidst a highly challenging economic environment.

Financial Performance overview 

Total Revenue for Q1 grew by a very handsome 39% to Rs. 1.935 billion, against Rs. 1.396 billion in the corresponding quarter in the prior year, while Gross Profit in absolute terms rose by 37% to Rs. 525.6 million, against Rs. 382.6 million in Q1 of FY 2021/22. 

Gross Profit Margins were maintained unchanged at 27%, despite mounting domestic and external challenges such as Sri Lanka’s multiple crises of economy, energy and foreign exchange, compounded by a global scarcity of raw materials. 

Meanwhile, operating profit grew by 50% during the period under review to Rs. 280.2 million, up from Rs. 186.75 million in the corresponding period. However, Operating Profit Margin growth was subdued, but still recorded an expansion to 14%, up from 13%. This was as a result of various economic relief packages and facilities provided to employees making it the highest ever increase in salaries, coupled with rising inflation costs and exchange rate volatility. 

Profit Before Tax (PBT) grew by 18%, demonstrating a sustained momentum of recovery, to Rs. 198.8 million, compared with 168.9 million earlier, although Margins contracted slightly, from 12% in the corresponding period, to 10% during the period under review, as a result of the worsening economic environment. 

CEO Nishal Ferdinando said: “Through our skilful and agile manoeuvring, and by leveraging the expertise and experience of our management team, we have continued to deliver exceptional excellence to all our stakeholders, including our customers, amidst the worst economic crisis that Sri Lanka, or we as an organisation, have ever faced. Through foresight and experience, we anticipated the present crises, based on economic indicators and on-ground information. 

Thus, we immediately rallied our people and our supply chain partners to secure adequate raw material stocks for at least eight months, which we were able to achieve thanks to our strong financial position, which was further consolidated as a result of our IPO. In fact, the cash infusion from our IPO, has ensured low gearing, thus a reduction in financing costs, helping us to remain relatively unburdened amidst a tightening monetary environment.” 

Just over a year ago, in July 2021, JAT Holdings launched its IPO, which saw the company successfully raise Rs. 2.2 billion, amidst an oversubscribed issue, through the sale of 82,904,846 ordinary shares at a price of Rs. 27.00 per share. These funds have since been used for setting up an R&D centre, commissioning a manufacturing facility in Bangladesh and channelled towards market development initiatives for the Group’s new flagship brand, WHITE by JAT.

“We also have gone above and beyond, as an employer of choice, to ensure that our people are provided with adequate cushioning during the crisis. We have provided financial relief schemes, along with relief in other forms such as flexible work, access to essential items, moral and emotional support, and an overall sense of security in employment. This has helped us to work better as a team and continue to deliver what is expected of us, by customers and all other stakeholders,” Fernando.

Group Export Revenues dipped slightly during Q1, by 12%, as a result of reorganisation due to the commencement of operations at the Group’s manufacturing facility in Bangladesh, owned and operated through its fully owned subsidiary, Asia Coatings Ltd. 

However, export revenues are forecasted to improve drastically as operations at the new facility get up to speed. Additionally, the Group has placed a strategic focus on developing its export operations, in order to further consolidate its financial and operating position over the rest of the year. 

Revenues from the Group’s Sri Lankan operations expanded by a significant 59% to Rs. 1.576 billion in Q1 of FY 2022/23, up from Rs. 989.3 million in the corresponding period. This was driven by increased sales, coupled with the effects of input price inflation. 

All of the business sectors of JAT Holdings recorded healthy to phenomenal gains in terms of revenue growth during the period under review. Its largest business sector, Wood Coatings, witnessed a 21% expansion in revenue, rising to Rs. 796 million this quarter, up from Rs. 658 million in the corresponding period. 

WHITE by JAT saw the largest growth in revenues, driven by growth in the emulsion sector, coupled with increased market share. Accordingly, the sector posted a phenomenal 206% revenue growth in the quarter under review, soaring to Rs. 203.1 million from just Rs. 66.5 million in the corresponding period. Similarly, WHITE by JAT’s online sales too posted a remarkable revenue expansion of 187%. The Group’s Brushes business also recorded revenue growth of 27% to Rs. 56.25 million this quarter, up from Rs. 44.3 million in the corresponding period.   

Notably too, the volume of sales accruing to the Group’s Paints business rose by a remarkable 49%.  One year since the Issue, JAT Holdings PLC has fulfilled its promises to investors with regard to its IPO Objectives.

 Founder and Managing Director Aelian Gunawardene said: “We are pleased to communicate to investors that we have made excellent progress with regard to our IPO Objectives. “Construction on our Bangladesh manufacturing facility has been completed, and the facility commissioned, ahead of schedule. We look forward to reaping the benefits of enhanced production capacity and capability at our new facility in the coming months.  “Work has also already begun on our R&D centre, and we expect it to be completed within the next two months, again ahead of schedule and much lower than was initially budgeted. We have also used funds from the IPO to add value and build our flagship WHITE by JAT brand, and this has paid off handsomely.”