Teejay makes strong start to 2019-20 with Q1 net profit growth of 62%

Teejay Chairman Bill Lam (left) and CEO Shrihan Perera

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 Rs. 453.7 million and net profit of Rs 376.5 million at Company level for the three months ending 30 June 2019, achieving impressive growth of 62% and 50% respectively in its seventh consecutive quarter of improved sales and profits.

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

Group revenue increased by Rs. 1.306 billion or 19% to Rs. 8.125 billion 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% and 12% respectively, enabling Teejay to record a gross profit improvement of 35% and operating profit growth of 58%.

“These results are particularly noteworthy in the context of rising raw material prices and increases in the costs of other inputs,” Teejay Lanka Chairman 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% and 5.6% respectively.

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

Lam disclosed that Teejay is continuing with a strong balance sheet and a net cash balance of Rs. 4.45 billion, in line with the Group’s strategy of keeping the Company net debt-free, and that a final dividend of Rs. 1.10 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% 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. 

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.