Teejay 3Q earnings down amid soaring raw material prices

Bill Lam

Pubudu De Silva

Improved demand from the region and enhanced capacity have helped Teejay Lanka PLC to post group revenue of Rs.36.1 billion for the nine months ending on December 31, 2021 and record a strong top line growth of 64 percent over the corresponding period of the previous year.

A period described by Chairman Bill Lam as less disrupted by COVID-19 than in 2020, the nine months saw Teejay Lanka counter increase in raw material prices with enhanced productivity to achieve a gross profit of Rs.3.2 billion and profit after tax of Rs.1.7 billion, an improvement of 23 percent.
In the three months ending on December 31, 2021, Teejay Lanka increased revenue by 53 percent to Rs.13 billion but with raw material costs rising ahead of the corresponding product price increases, profit after tax for the quarter declined by 5 percent to Rs.738 million. 
The group has continued its strong balance sheet to end the nine months reviewed with a cash balance of Rs.4.4 billion.
Elaborating on the results for the period, Lam said the increases in raw material costs was the biggest challenge faced by the group with increases in the prices of yarn, energy, freight, dyes, chemicals and auxiliaries reducing margins. However, the operational excellence initiatives implemented over the past two years helped mitigate the impact to some extent.
Teejay Lanka CEO Pubudu De Silva said the group remains confident of maintaining growth and delivering value to shareholders on a continuous basis, with the anticipated benefits of an integrated Enterprise Resource Planning (ERP) solution with the implementation of SAP S4 HANA, to take advantage of the expansion across the group.
Among these expansions is a US $ 26 million development at Teejay India, which is scheduled to come on stream from February 2022 and will increase production by 20 tonnes a day by September this year, De Silva said.
As at December 31, 2021, Brandix and Pacific Textured Jersey Holdings held nearly 60 percent of the issued shares of the company. Melstacorp, which held about 12.6 million Teejay shares, as the sixth largest shareholder, was not present in the latest top 20 shareholder list. The new entrants to the top 20 shareholder list were Rubber Investment Trust, the Employees’ Trust Fund and ARC Capital.