Higher demand, capacity increases and weaker rupee boost Teejay 2Q

Teejay Lanka PLC has built on its robust first quarter performance in the second quarter of 2021-22, helped by strong demand for fabric from strategic customers, due to the changing dynamics of the global market, increased capacities and depreciation of the rupee.

Sri Lanka’s leading fabric manufacturer has reported a revenue of Rs.23.1 billion at group level for the six months ending on September 30, 2021, reflecting a top line growth of 71 percent. The second quarter contributed Rs.12.7 billion to the top line, with an improvement of 44 percent over the corresponding quarter of last year.

The group posted a profit before tax of Rs.1.15 billion for the six months, up 44 percent. Pre-tax profit for the second quarter amounted to Rs.763.7 million, largely as a result of reduced margins, due to predicted raw material and commodity price increases and higher distribution and marketing costs linked to the increased volumes.

Group profit after tax for the six months improved by a noteworthy 59 percent to Rs.954.1 million, despite the second quarter’s net profit growing by only 2 percent to Rs.643.5 million, according to the interim financial statements filed by Teejay Lanka with the Colombo Stock Exchange (CSE).

Commenting on the group’s performance, Teejay Lanka Chairman Bill Lam said, “While we continue to see growth opportunities, we also see challenges in this turbulent environment, notably increases in the prices of cotton, dyes, chemicals, auxiliaries and logistics. Considering these factors as well as the challenging operating conditions in the first half, due to the COVID waves in India and Sri Lanka, our growth and improvement in profit are noteworthy.”

He said the group is strategically approaching suppliers to secure yarns at a better price and negotiations are in progress with customers to manage the margins at better pricing. 

“The teams are constantly collaborating with suppliers to minimise the impact of supply chain disruptions and higher freight rates,” Lam added.

Teejay Lanka CEO Pubudu De Silva noted that the group’s US $ 26 million expansion project in India is progressing to planned timelines, with plant construction ongoing and orders for additional machines placed. 
“As part of our strategy of adapting to the changing environment, we are progressing with an upgrade to the SAP-HANA relational database management system,” he disclosed.

“Teejay is navigating the journey to achieve the goal of US $ 300 million by 2023, amidst the changing business dynamics and uncertainties, with cautiously-placed strategies that will achieve the targets set for our stakeholders,” he added.