Textured Jersey 1Q FY13/14 profit up 40% year-on-year
Thursday, 25 July 2013 01:23
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Rs. 0.58/share final dividend brings the FY12/13 combined pay-out to 80% of FY12/13 full year profits
As per the latest results released to the Colombo Stock Exchange (CSE), Textured Jersey Lanka PLC (TJL), Sri Lanka’s leading provider of knit fabric, started the new financial year posting an impressive Rs. 240 million net profit for the quarter ended 30 June 2013 (1Q FY2013/14), representing a strong 40% year-on-year growth.
Increased sales revenue, improved margins from higher capacity utilisation stemming from increased sales volumes and TJL’s strong financial position were identified as the main reasons for its robust year-on-year performance.
During the quarter under review, the company also declared a Rs. 0.58 per share final dividend for the last financial year ended 31 March 2013, bringing the total annual dividends to Rs. 1.24 per share, a very generous 80% pay-out of the FY2012/13 full year profit.
As per the release to the CSE, TJL Chairman Bill Lam stated that higher sales volumes compared to the corresponding period last year made it possible for TJL to achieve Rs. 2.9 billion in sales revenue for 1Q FY2013/14, up 10% year on year.
His statement mentioned that the higher volumes also resulted in gross profit margins improving to 12.1% in 1Q FY2013/14 versus 10.3% in the corresponding quarter of last year. Lam stated the main reasons for the margin improvement were higher levels of efficiency and the wider distribution of fixed overheads as a result of higher capacity loading. As per the release, TJL’s gross profit for 1Q FY2013/14 reached Rs. 348 million, up 29% year-on-year.
According to Lam, the positive impact of the higher sales volumes and improved gross margins flowed down to the operating profit level, resulting in an operating profit margin of 8.0% for 1Q FY2013/14 compared to 6.3% during the same period of the previous year. TJL also reported a strong operating profit of Rs. 228 million for the quarter under review, representing a 39% year-on-year growth.
Mentioning the company’s financial position, Lam stated that the company retained a healthy cash balance of Rs. 1.7 billion as at 30 June 2013, and that it had completely settled both short- and long-term borrowings at the end of the period. As per his statement, this lowered the finance expense to an almost non-material level for 1Q FY2013/14, which allowed the company to record a net finance income of Rs. 23.7 million for the quarter, up 200% year-on-year.
Summing up the quarterly result, Lam mentioned that the higher operating profits and the strong cash position allowed TJL to record a net profit of Rs. 240mn for 1Q FY2013/14, 40% higher than the corresponding quarter of last year.
Further, according to Lam, the continued interest from TJL’s main customers – Victoria’s Secret, Marks & Spencer, Intimissimi and Decathlon – combined with the growth potential of emerging customers, makes TJL’s management confident of strong demand for the next period as well.
On strategic initiatives, Lam stated that the construction of TJL’s multi-fuel boiler plant was progressing according to plan. According to Lam, the plant is expected to reduce TJL’s energy cost substantially when commissioned. Commenting on the expansion strategy, the statement mentioned that TJL had commenced adding capacity through subcontracting, while building long term relationships. This process, while addressing immediate capacity constraints, is expected to enable TJL to further evaluate long term options.
Lam concluded his statement by mentioning that given all these factors and a strong order book, TJL’s management remained confident that the company would continue to enhance shareholder value in the coming quarter as well.
