Teejay optimistic with capacity expansion despite challenging Q1

Chairman Ajit Gunewardene (left) and CEO Pubudu De Silva

Teejay Lanka PLC has begun 2023-24 with a strong balance sheet, closing an extremely challenging first quarter with cash and cash equivalents of Rs. 9.6 billion, despite a decline in earnings. 

Sri Lanka’s first multinational textile manufacturer has reported revenue of Rs. 14 billion for the three months ending 30 June, reflecting a reduction of 41% over the corresponding quarter of the previous year.

The Group posted gross profit of Rs. 283 million for the period, which it said is a demonstration of its resilience in a period where industries were challenged with volatilities. Teejay’s gross profit margin reduced to 2% for the period, in contrast to the 6.9% reported at the end of the fourth quarter of 2022-23. 

The Group reported a pre-tax loss of Rs. 701 million and a net loss of Rs. 853 million for the three months reviewed, attributing the downturn to a drop in sales, the appreciation of the Rupee, fluctuating raw material prices, capacity underutilisation and costs associated with inventories. However, Teejay experienced a reduction in inventories during the quarter and is now at low levels, which is a positive sign as the entire supply chain has lowered its inventory levels, the company said.

Teejay Lanka Chairman Ajit Gunewardene said the Group is confident that it has deployed the necessary resources to remain resilient and is on the path to recovery. “We continue to evaluate the ongoing changes in market dynamics and have begun implementing new long-term strategies and innovative solutions to navigate the effects of identified pressures, volatilities and challenges,” Gunewardene said.

Teejay Lanka CEO Pubudu De Silva added that digitalisation, setting and implementing a strong ESG framework, reduction of costs, new product development to improve revenue, improving synthetic capacity, and the upliftment and empowerment of human capital, thus enhancing resourcefulness, are considered the Group’s priorities, going forward.