Teejay adapts to ‘new normal’ to post net profit of Rs. 631 m in Q2

Friday, 13 November 2020 00:20 - - {{hitsCtrl.values.hits}}

Teejay Chairman Bill Lam and Teejay Lanka CEO Pubudu De Silva

As the world continues to focus on flattening the curve in the COVID-19 pandemic, Teejay Lanka PLC has adapted to the ‘new normal’ to post an improved performance in the three months ending 30 September.

Sri Lanka’s only multinational textile producer has converted the first quarter’s net loss of Rs. 31.5 million to a net profit of Rs. 631.3 million for the second quarter of the current financial year and reported profit-before-tax of Rs. 782.3 million for the three months reviewed.

Revenue grew by 86% over the three months to Rs. 8.8 billion from Rs. 4.7 billion as at 30 June, the Company reported in a filing with the Colombo Stock Exchange (CSE). The extreme adversity of the first quarter of the year has however, taken some of the starch out of the Group’s six-month figures, with revenue down 22% to Rs. 13.5 billion, gross profit down 42% to Rs. 1.3 billion, and pre and post-tax profit down 48% and 52% respectively over the corresponding six months of 2019-20 to Rs. 796.3 million and Rs. 599.8 million for the six months ending 30 September.

Nevertheless, Teejay Chairman Bill Lam has said the Group remains “cautiously optimistic” as the situation in Sri Lanka continues to evolve, and that with the Group’s presence felt throughout the region, Teejay is poised on the cusp of realising its target of becoming a $ 300 million company in the foreseeable future.

“With the help of the Operational Excellence initiatives launched, the Group continues to focus on cost-control mechanisms. These initiatives have resulted in managing non-operational and non-strategic costs while re-evaluation of the cost base has given rise to elimination of non-essential costs making Teejay leaner. However, the Group has invested substantially on added health and safety related measures to protect our employees from the pandemic,” Lam said.

“During these times of intense competition resulting from price swings and high demand for low cost products, the Group is positioned to capitalise on the opportunity created by customers by focusing on a supply chain strategising to mitigate reliance on a single country, and equipped with a strong order book is prepared to face any challenge,” Lam added.

Teejay Lanka CEO Pubudu De Silva disclosed that Teejay’s operations in India are gathering momentum and had increased their loading capacity during the second quarter. According to De Silva, The Group has also taken deliberate steps to unfreeze the restrictions on capital expenditure to continue with the modernisation of the plants. “This 180-degree turnaround in performance would not have been possible if not for the commitment and ingenuity of Team Teejay, which should receive all the credit for the second quarter’s performance,” De Silva said.

Teejay Lanka has continued with a strong balance sheet and a cash balance of Rs. 5.8 billion at the end of the period reviewed, keeping the Company net debt free.