JAT Holdings September profits soared on robust recovery in Bangladesh and Sri Lankan markets

Releasing its first interim financials since going public, JAT Holdings PLC reported some robust top and bottom line performances for the three months ended in September (2Q22), as the sales for its wood coating products recovered exponentially in both Bangladesh and Sri Lankan markets from the pandemic-induced slump last year. 
The market leader in wood coating products in Sri Lanka reported revenues of Rs.1.73 billion for its fiscal second quarter from July through September, up 31 percent from the same period last year, predominantly supported by its two primary markets.

Although the quarter-wise breakdown isn’t given in the interim financial statements of the company released last week, in the six months to September, the sales in Bangladesh soared to Rs.816.17 million, from just Rs.73.29 million in the corresponding period last year. Meanwhile, the sales in its home market rose by 35 percent to Rs.2.28 billion between the two periods. 

Although the company exports to India, the Maldives and some African markets, the sales to them are still at a nascent stage and aggregate sales to these markets fell by 27 percent to Rs.35.13 million in the six months. 
The consolidated revenue for the six months rose by a staggering 73 percent to Rs.3.13 billion. 

For the July-September quarter, JAT Holdings reported earnings of 49 cents a share or Rs.240.25 million, compared to 18 cents a share or Rs.83.71 million in the comparable period last year, an increase of 187 percent.  
JAT Holding’s performance also provides a proxy for the strong recovery in the house building and broader constructions industry in both Sri Lanka and Bangladesh in the forgoing quarter, despite the softer forms of restrictions prevailed, due to the resurgence in the virus. 

In the six months to September, the company reported earnings of 85 cents a share or Rs.401.45 million, compared to a loss per share of 5 cents a share or Rs.22.18 million in the year earlier period, which was plagued by the pandemic-related restrictions. 

“We are pleased to report to our shareholders that JAT Holdings is delivering exceptional value and remains committed to achieving our targeted PAT of Rs.1,200 million this year,” said Chief Executive Officer Nishal Ferdinando, in a media release.

The revenues and profits are largely skewed towards the second half of the fiscal year ending on March 30, 2022, as the paint industry is typically seasonal. According to the company, its after tax profit is split 30 and 70 percent between the first and second half of its financial year. 

In July, JAT Holdings debuted in the Colombo Stock Exchange by floating 82.9 million shares, at Rs.27 a share, to raise Rs.2.2 billion. 

The company set aside Rs.515.42 million out of the IPO proceeds to set up a manufacturing facility in its key overseas market in Bangladesh while another Rs.433.17 million and Rs.256.88 million for upgrading its R&D facility and expanding the ‘WHITE by JAT’ marketing and development work, respectively. 

A further Rs.301.5 million was earmarked for setting up a manufacturing facility in East Africa. 
Providing an update on the progress made on these projects, JAT Holdings Managing Director Aelian Gunawardene said, “The production facility for our proposed Bangladesh plant has been successfully secured, with interior work now in progress, while the machinery has been ordered and shipped out.”

 
“The land for the company’s proposed R&D centre has also been successfully acquired, plans have been drawn up, laboratory setup finalised and orders for instruments have already been placed. The recruitment process for the R&D centre has also commenced, with expert scientists having already been signed on,” he added. 

Further, the company has recruited an overseas market expert as Director International Business Development, who will overlook the sales and market expansion operations in Africa.