Teejay Lanka records improved 1Q performance

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

Teejay Lanka PLC has made an encouraging start to FY 2021-22 with solid top and bottom line growth in the three months ending 30th June 2021, shrugging off the pandemic-imposed shackles that retarded 1Q growth last year and overcoming the impact of the third wave of COVID-19 
on the industry.

Sri Lanka’s largest textile manufacturer more than doubled revenue to Rs. 10.4 billion at group level for the three months posting growth of 119 percent, achieved 27-fold improvement in its profit before tax of Rs. 385 million, and converted last year’s 1Q net loss of Rs. 31.5 million into a post-tax profit of Rs. 310.5 million in 1Q, 2021-22, the Group’s third consecutive quarter of profit growth.

Teejay Lanka Chairman Bill Lam welcomed the positive start to the new financial year, but cautioned that raw material prices and the new dynamics brought about by the global pandemic would continue to pose challenges to the business. 

He attributed the growth in turnover to the Group’s success in maintaining uninterrupted operations at all three manufacturing plants despite the third wave of COVID-19, additional revenue from outsourced operations in Sri Lanka and the depreciation of the Rupee in the review period. 
The turnaround in 1Q profits was achieved through increased volumes, a strong order book, strategic management of yarn price increases and stringent control of costs, he said.

At company level, Teejay Lanka reported profit before tax of Rs. 347 million for the three months, reflecting growth of 40 percent, while net profit improved by 50 percent to Rs. 315 million on revenue of Rs. 6.2 billion, up 65 percent over the corresponding quarter of the previous year.

Based on these results, Teejay Lanka PLC has proposed an interim dividend of Rs. 1.15 per share in respect of the quarter reviewed. The Group has continued its strong debt-free balance sheet from the previous year with a net cash balance of Rs. 4.8 billion.

Elaborating on the Group’s performance, Teejay Lanka CEO Pubudu De Silva said raw materials and cotton prices are at a peak level while the global market remains competitive with changing dynamics. 

“The Group foresaw these challenges during the last financial year and strategically approached its customers to minimise the impact on profits and margins,” he said, adding that “Our operational excellence journey has enabled the Group to increase productivity while reducing overheads and wastage to reduce the impact on margins.”

He disclosed that expansion of the Group’s Indian plant is within the planned timeline despite the turbulent environment and investments made are progressing well. “These investments will undoubtedly position Teejay as the leader in the Textile arena in South Asia,” De Silva said. Teejay has invested US$ 26 million to increase the India plant’s daily output to 20 tons, which would contribute to the Group’s target of becoming a US$ 300 million business.