Resilient Teejay posts 5th successive quarter of profit growth

Teejay Chairman Bill Lam and CEO Shrihan Perera 

• Reports 9-month net profit of Rs. 1.26 b on sales of Rs. 23 b

Teejay Lanka PLC has achieved its fifth consecutive quarter of top and bottom line growth in the third quarter of 2018-19, demonstrating its resilience during a period of higher raw material and utility costs.

Reporting revenue of Rs. 23 billion for the nine months ending 31 December 2018, a growth of 26%, and net profit of Rs. 1.26 billion, an improvement of 16%, Sri Lanka’s only multinational textile manufacturer said this had been achieved by operating at optimal capacity.

Group gross profit for the nine months was up 18% to Rs. 2.6 billion, operating profit improved by 19% to Rs 1.6 billion and profit before tax at Rs. 1.48 billion reflected growth of 11%, the company said in a filing with the Colombo Stock Exchange (CSE).

Revenue in the third quarter of 2018-19 alone increased by 28% to Rs. 8.48 billion, profit before tax grew by 7% to Rs. 628.8 million and net profit improved by 12% to. Rs 550.9 million over the third quarter of the preceding year, the company said.

Elaborating on these results, Teejay Lanka Chairman Bill Lam said the margin for the third quarter had improved to 12.3% as against 11.2% on a quarter-on-quarter basis as a result of better loading and an improved mix via the Group’s US and EU business units.

Additionally, improved capacity utilisation across the Group, mainly with Teejay India’s expanded capacity exceeding expectations with optimum production and capacity utilisation, had contributed to the performance, he said. The depreciating rupee and cost reduction initiatives also helped to keep overhead cost increases below revenue growth, Lam explained.

He disclosed that the Teejay Group had a carried forward net cash balance of Rs. 4.6 billion at the end of the quarter reviewed and a strong order book for the final quarter of 2018-19, projecting strong numbers for the Group.

Lam announced an interim dividend of 85 cents, a 20% increase above the previous year, primarily on the Group’s strong balance sheet and in line with its dividend policy, keeping both local and international investors in mind.

Looking ahead, he added: “While we continue to see growth opportunities for Teejay Group, we also see challenges, foremost among them sale mix and raw material price volatility and increases in utility costs. Despite the challenging market conditions, the Group is optimistic that with a strong order book, capacity optimisation and the depreciation of the Rupee it will end the financial year on a strong footing.” 

A Weft knit fabric specialist 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.