February, 9, 2023
Teejay Lanka PLC has reported strong revenue growth for the nine months ending 31st December 2022 as well as for the third quarter of the year, but higher domestic costs, increased taxes and a softening of orders in international markets have impacted the Group’s third quarter profits.
In a filing with the Colombo Stock Exchange (CSE), Sri Lanka’s first multinational textile manufacturer said the Group had improved revenue for the nine months by 84% to Rs 66.8 billion and for the third quarter by 38% to Rs 18.15 billion. However, with the underutilisation of its plants due to a softening in its main markets, increases in fixed costs due to expansion, income tax increases and a rise in utility costs, the Group posted a net loss of Rs 365 million for the third quarter.
Despite the challenges of the third quarter, Teejay said it had, as a result of the Group’s exceptional first half performance, ended the nine months with a robust cash balance of Rs 10.4 billion, a nine-month net profit of Rs 1.97 billion and a net assets base of Rs 36.2 billion, representing a net assets value of Rs 50.52 per share, an increase of 90% when compared to the corresponding quarter of the previous financial year.
Noting that a crucial challenge faced by the Group during the quarter was a low order book, an obstacle that is envisioned to remain unchanged for the upcoming two quarters, Teejay Lanka Chairman Mr Ajit Gunewardene disclosed that “The China Plus One strategy acts as a bright prospect for the Textile and Apparel industries, and our timely expansion in India makes Teejay a likely benefactor of the strategy, going forward. Teejay will also continue to explore opportunities for growth by discovering new business and evaluate the potential of capturing new international markets.”
Teejay Lanka CEO Mr Pubudu De Silva explained that Teejay has taken a strategic approach to move into scheduled factory slowdowns for short durations to address the rising overhead costs, and intends to fine-tune this strategy going forward. He added: “The strides made in the Group’s operational excellence journey enabled Teejay to adopt a fresh new efficient model to reduce its breakeven point which peaked during the end of Q3. As a result, the Group is now geared to face the challenges of the upcoming two quarters by implementing a leaner operating model. Despite the volatilities in the market, Teejay remains confident that positives are not entirely absent.”
Teejay Lanka was the first textile manufacturer in Sri Lanka to receive membership of the US Cotton Trust Protocol, and is a public quoted company with 40 per cent public ownership. The company is backed by Sri Lanka’s largest apparel exporter Brandix Lanka which has a 32 per cent stake. Pacific Textiles of Hong Kong, whose key shareholder is the Tokyo Stock Exchange listed Toray Industries Inc., owns 27 per cent of Teejay Lanka.
Teejay Lanka was ranked the No 1 corporate entity among 100 public listed companies in Sri Lanka for Transparency in Corporate Reporting in the TRAC 2022 assessment carried out by Transparency International Sri Lanka (TISL), the local arm of the international corruption watchdog. The TISL assessment was carried out on three areas crucial to fighting and preventing corruption: reporting on anti-corruption programmes, transparency in company holdings and the disclosure of key financial information in domestic operations.
The Company has been adjudged the Best Textile Exporter in Sri Lanka at the Presidential Export Awards presented by the Export Development Board (EDB) and has been named among the 100 Most Respected Companies in Sri Lanka by LMD.
An ISO 9001:2015, ISO 14001:2015 and OHSAS 18001:2007 compliant company and the first in the industry to develop green fabric, Teejay has been listed on the Colombo Stock Exchange (CSE) since 2011 and was included in the S&P Top 20 Index in Sri Lanka. The Company has also been named among the Forbes ‘200 Best under a Billion in Asia’ and been recognised as the ‘International Textile Firm of the Year’ and the ‘International Dyer and Finisher’ by World Textile Institute, London.
Photo caption: Teejay Lanka Chairman Mr Ajit Gunewardene (left) and CEO Mr Pubudu De Silva
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