Teejay Lanka knits strong start to FY19 with bottom line growth of 27%

Monday, 30 July 2018 00:00 - - {{hitsCtrl.values.hits}}

Capacity expansion in India and an increased order book from the US and EU have enabled Teejay Lanka PLC, Sri Lanka’s only multinational textile manufacturer, to make a strong start to 2018-19 with healthy sales and profit growth.

Profit after tax grew by a respectable 27% to Rs. 279.3 million on revenue of Rs. 6.8 billion, which was up 26%, the company said in a filing with the Colombo Stock Exchange (CSE).

Based on this performance, Teejay Lanka has proposed a final dividend of 90 cents per share, reflecting the confident sentiments for the future of the Group.

Elaborating on these results, Teejay Lanka PLC Chairman Bill Lam said securing the benefits of GSP through a carefully-managed European customer portfolio, and new product launches to US customers had contributed to the higher turnover.

“As a result of higher volumes, higher levels of efficiency were recorded to deliver a better year-on-year performance,” he said, disclosing that growth in turnover and net profit was recorded against an increasingly challenging business environment with short life cycle orders and more demand for discounted programs.

“Margins were challenged due to the adverse effects of raw material prices,” Lam said. During the first quarter, cotton prices crossed $ 1 per pound posing a further challenge for upcoming quarters for the global and local textile industry. “As cotton yarn represents 60 to 65% of the entire product, the impact of the increase in cotton is considerable to the margin,” he pointed out.

Lam said the Teejay Group has already begun discussions with customers to pass on some of the raw material price increases. “However, as the situation continues, we are taking all measures to work on strategies to make sure the impact is managed during the second half,” he said. “Focusing on more product reengineering and the innovation pipeline to cater to the changing dynamics of the customers to bring out a healthy product portfolio is a continuing strategy.”

The Group is also continuously re-calibrating its product portfolio and has taken steps to increase prices which will come into effect in the second half of the financial year, Lam disclosed.

One of the region’s largest textile manufacturers, Teejay supplies fabric to some of the best international brands across the world. The Group recently doubled the capacity of its Indian mill, following the completion of an expansion project involving an investment of $ 15 million (more than Rs. 2.3 billion at current rates).

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 last year. 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.