Weft-knitted fabric maker Teejay Lanka PLC has ventured into the manufacturing of Personal Protection Equipment (PPE) to cater to the growing demand in local and international markets as key apparel brands have pushed back orders by several months amid the COVID-19 crisis.
“Adapting to the changing environments, Teejay has ventured into a new endeavour of producing Personal Protection Equipment (PPE) to cater to local and international markets.
Some of our key retailers and new customers have placed orders for PPE products and we expect the demand to increase with time,” Teejay Lanka PLC, Chairman Bill Lam stated.
In the fourth quarter ended on March 31, 2020, the company witnessed 21 percent year-on-year (YoY) decline in revenue to Rs.7 billion while the net profit slipped 30 percent YoY to Rs.422 million amid customer requests to push back orders. The development team of Teejay Lanka had immediately commenced operations on developing fabric with SLINTEC and local academia for PPE consisting of masks and overalls and has been working on few fabrications, which are pending requisite approvals.
“With the existing situation, the company commenced a strategy to capture the growing demand for PPE and embarked into the export of commercial orders of PPE such as masks during this period,” the company noted.
Although, it expects a reduction in the existing order pattern with end-market store closures in the US and EU where most of its strategic customers are based during the next 6 months to a year, Teejay anticipates tremendous demand for PPE from existing and new customers based on the existing capabilities of the company.
Teejay currently manufactures weft-knitted fabric, which is used mainly for men’s and women’s undergarments, lounge-ware and Yoga pants, which are considered essentials and are in the comfort-wear segment.Therefore, it was pointed out that the decline, which is forecast for the apparel industry, wouldn’t fully impact the company.
Further, the company noted that the demand from existing strategic customers via supermarket chains, online outlets have seen significant growth in sales for its products amid a COVID-19 environment in the US and EU while its Asia-based customers continue with the required demand.
As major brands that depend on a single destination, in particular China is in the process of rationalising their supply chains, Lam emphasised that Teejay’s strength in the South Asian region would be an advantage in navigating through this storm.
Despite the decline in performance in the fourth quarter, Teejay was able to record highest revenue, gross profit and net profit for the full financial year.
During the financial year under review, the company’s revenue grew by 5 percent YoY to Rs.33.3 billion, which resulted in a net profit growth of 28 percent YoY to achieve Rs.2.4 billion. “Had the financial year concluded without the pandemic situation your group would have reached revenue of Rs.35 billion and net profit of Rs.2.7 billion to surpass all previous results. The overall growth in gross profits can be mainly attributed to stabilization of cotton prices, improved product mix through a very strong order book and better utilization of capacity,” Lam acknowledged.
Teejay is a joint venture entity between Brandix Lanka Limited, Sri Lanka’s largest apparel exporter, and Pacific Textured Jersey Holdings Limited in Hong Kong.