Press Release: The Teejay Group which recently consolidated its operations in Sri Lanka and the region under the single brand ‘Teejay,’ announced a strong revenue growth of 33 percent over the nine months ended 31st December 2016.
The Group recorded a revenue of 16.4 Billion compared to the Rs. 12.3 Billion during the corresponding period last year and announced a 66 percent growth in dividends to shareholders.
Chairman of Teejay, Bill Lam said that this was achieved through continually operating at optimal capacity, with a full order booking during the period; and that the growth in top line was a result of additional orders being canvassed to cater to the future growth stage of the Company.
Even though there were higher sales, the Gross Profit growth was only 27% percent with Rs. 2.4 Billion compared to that of last year’s Rs. 1.9 Billion, he added.
The Chairman further said that a combination of factors had affected the Group’s gross profit, including the acceptance of extra lower margin orders in preparation for growth; price competition, early investments towards future expansion, the product mix, and the overall impact of steep short term price hikes in raw material.
The Group’s profit before tax (PBT) is reported as Rs 1.6 Billion compared to the Rs. 1.4 Billion last year, an increase of 16 percent. This result has been diligently supported by solid Cost management and control across the entire group.
Another impacting factor was taxation, as Teejay Lanka’s tax holiday ended in September 2016; while both Teejay India and Teejay Prints are subject to tax. The tax bill grew by 281 percent, going up to Rs. 150 Million from Rs. 39 Million the previous year.
Despite this situation the Group reported an absolute profit after tax (PAT) of Rs. 1.5 Billion compared to the Rs. 1.3 Billion last year; showing an increase of 9 percent during the same period.
“The Teejay Group continues to keep a sharp eye on its cash flow disciplines and has carried through a strong balance sheet from the previous quarter with a cash balance of LKR 4 Billion. The consolidated Earnings per Share for the Group recorded SL Rs. 2.10 on a year on year basis showing a growth of 3 percent, although there was a 34 percent drop in growth during the quarter under review, due to the challenges discussed above” says Lam.
The Chairman said “ The Group is embarking on its final lap of the second half, setting the foundation for its long-term growth plans. The business is watchful of future market challenges, with a close eye on price fluctuations in the market and increasing changes in the product mix. Despite these short-term impacts which have been somewhat overcome now, our aspirations remain ambitious and aggressive, as we continue to explore new ways of further extending our footprint.”
On a quarterly basis the Group reported a revenue growth of 6.3 Billion compared to the Rs. 5.6 Billion recorded last quarter, showing a growth of 14 percent. However, Gross profits dropped by 15 percent for the third quarter, to Rs. 832 Million.
Apart from the above, a temporary countrywide stock outage in coal was also a contributory factor, with energy costs rising due to the coal plant not being able to function at maximum capacity, during some of the period under review.
This resulted in a further deterioration of PBT for the quarter, recording a 20 percent drop in operating profits. Since the impact of GP could not be adequately mitigated by the tighter overhead controls in place, the Group reported a net profit of Rs. 473 Million compared to Rs. 672 Million, during the same quarter last year.
However, CEO of Teejay, Sriyan de Silva Wijeyeratne says that despite minor setbacks, Teejay will forge ahead with new plans for expansion and growth. “Our aggressive enhancement in Divided with this interim Rs. 1.00 per share payment, is a clear indication of our confidence in the future potential we possess. We aspire to develop a culture of Service in Manufacturing, by creating bonds that matter.
We are already investing further in automation and technology, and innovation is at our core. We are preparing to embrace the future dynamics and trends in the textile industry, especially with the new demand for synthetics and digital prints and we are poised and ready to benefit from those changes. Our Expansion plans are moving according to plan, and the Company will benefit from added capacity in the near future.”, he stated.
“The prospects of GSP Plus in the near future would further augment the Group’s progress, as all our added capacity in India and Sri Lanka will become eligible for this benefit,” he added.