Teejay stays on trajectory in Q3 with net profit of Rs. 778.4 m

Teejay Lanka Chairman Bill Lam (left) and CEO Pubudu de Silva 

Top textile manufacturer Teejay Lanka PLC has reported Profit Before Tax of Rs. 951.8 million and net profit of Rs. 778.4 million for the third quarter of 2020-21, achieving growth of 12% and 8%, respectively, over the corresponding three months of the previous year.

The quarter’s performance also reflects the continuing trajectory of improvement since the start of the current financial year. Teejay Lanka 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, and its net profit for the third quarter represents a further increase of 23% over the preceding quarter.

While improving net profit, Sri Lanka’s only multinational textile producer posted a revenue of Rs. 8.5 billion for the three months, down 4% over the corresponding quarter of 2019-20 and a decline of 3.4% over the preceding quarter, but the company has expressed confidence that it is on course to achieve its target of becoming a $ 300 million business in the years ahead.

The impact of the extreme adversity of the first quarter of the year, however, continued to be visible in the Group’s results for the nine months ending 31 December. Revenue was down 16% to Rs. 22 billion, pre-tax profit declined by 26% to Rs. 1.748 billion, and net profit for the period at Rs. 1.378 billion reflected negative growth of 30%, according to financial statements filed with the Colombo Stock Exchange (CSE).

Teejay Lanka PLC has declared an interim dividend of Rs. 1.65 per share to be paid to all shareholders for the year.

In his observations on the Group’s performance, Teejay Lanka Chairman Bill Lam said the Operational Excellence initiatives launched throughout the company had resulted in greater control of non-operational and non-strategic costs and enabled the Group to reduce Distribution and Administration expenses by 21% and 4%, respectively, compared to the corresponding quarter of the previous year. “However, greater emphasis was given to added health and safety-related expenses to keep our employees safe,” Lam said. “The safety of our workforce is the number one priority of the Group, and we will continue to invest in all activities to protect employee wellbeing as the risk of COVID-19 continues.”

Teejay Lanka CEO Pubudu de Silva disclosed that in line with the Group’s target of achieving a revenue of $ 300 million as well as the growing opportunity of orders moving to the South Asian region, Teejay has ventured into a new and exciting expansion project in Teejay India, which entails the construction of a new production plant with warehouse facilities, and an investment in flexible machinery which can be converted from cotton production to synthetic material production. 

With this new development set to take place in two phases and completed by 2022, Teejay foresees that it will be able to increase its overall daily production capacity by 20 tons to reach a production level of 55 tons a day, which is a 57% increase in daily capacity, he said.

“We have seen a growth momentum from all our strategic customers and vendor partners and this is expected to continue into the future,” de Silva said. “The Group is continuing its focus on developing exciting new innovative products, keeping synthetic activewear and sustainability at the forefront. This has enabled us to attract many new customers,” he added but cautioned that price hikes of raw materials, particularly cotton, coupled with delays experienced on the global logistics map, will pose challenges to Teejay in the months ahead.

Teejay Lanka continued with the practice of maintaining a strong balance sheet in the quarter reviewed and recorded a net cash balance of Rs. 8.2 billion as at 31 December 2020, keeping the company net-debt-free.

One of the highlights of the year to date was the announcement of plans to issue 16 million new shares in two tranches in pursuance of completing an Employee Stock Ownership Plan (ESOP). The ESOP was first approved by Teejay Lanka shareholders in 2015 and re-approved in 2018, as a measure to motivate employees by giving them an opportunity to share in the company’s success.

Teejay Lanka was adjudged the Best Textile Exporter in Sri Lanka at the Presidential Export Awards presented by the Export Development Board (EDB) in 2019, moved up three places in the Business Today Top 30 companies ranking that year and was named among the 100 Most Respected Companies in Sri Lanka by LMD. 

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.