- Says now well-positioned for strong operational growth in 2018/19
Teejay Lanka PLC has reported profit before tax of Rs. 501.7 million at Group level for the final quarter of 2017-18, to end a challenging year with a noteworthy resurgence that augurs well for Sri Lanka’s only multinational textile manufacturer.
The weft knit fabric specialist with manufacturing operations in Sri Lanka and India, achieved a 27% growth in pre-tax profit in last quarter, despite higher raw material prices in global markets.
Teejay Lanka PLC Chairman Bill Lam said the momentum generated by the strong performance of the fourth quarter with investments in expansion during the year and a full order book are an indication of a promising first quarter of 2018-19 and a promising full year.
Group revenue for the quarter reviewed grew 13% to Rs. 6.6 billion and gross profit improved by 11% to Rs. 731.8 million, Teejay Lanka said in a filing with the Colombo Stock Exchange. Operating profit at Rs. 486.7 million for the three months reflected a healthy growth of 31%. Profit after tax for the quarter totalled Rs. 508.4 million, up 3% principally due to a 93% increase in income tax which resulted in a deferred tax asset of Rs. 97.6 million as a one-off gain in the fourth quarter of 2016-17 reducing to Rs. 6.7 million for the three months reviewed.
Lam attributed the Group’s strong performance in the fourth quarter predominantly to capacity expansion, higher efficiencies, exciting innovations, the Group’s growing product portfolio, its success in reducing administration costs by 15% through cost control initiatives and containing the growth in distribution cost to a marginal 4% with the increase in line with sales growth.
“It has been a strong finish to the financial year considering the challenges we faced in preceding quarters,” Lam said, commenting on the Group’s results. “We are now well-positioned for 2018-19, especially with the completion of the expansion of our plant in India, which has doubled its capacity in anticipation of our foray into new markets.”
The Group closed the year with a cash balance of Rs. 3.5 billion while increasing its inventory balances as a result of the expansion in capacity and a strong order book, and maintained an optimised working capital despite the expansion in India, which entailed an investment of $ 15 million.
Lam pointed out that the Group had transformed a first half net profit of Rs. 590 million to a net profit of Rs. 1 billion in the second half to end with a net profit of Rs. 1.6 billion for the full year. Group revenue for the 12 months ended 31 March 2018 was up 12% to Rs. 24.7 billion while profit before tax was Rs. 1.8 billion.
Lam said the Group has positioned itself during the year to reap the benefits of GSP through its capacity expansion. Teejay’s manufacturing facilities are currently at optimal operating capacity and strategies have been initiated to pursue new opportunities from leveraging the Group’s regional footing, providing flexible and better solutions and broadening its customer portfolio.
“The year ahead looks exciting with the transformations that have been carried out and we will continue to improve and sustain our performance while increasing value to our shareholders,” he added.