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Increased capacity utilization props up Teejay Lanka 3Q top line

8 February 2019 10:29 am - 0     - {{hitsCtrl.values.hits}}

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Weft knit fabric maker, Teejay Lanka PLC reported higher rupee profits for the quarter ended December 31, 2018 (3Q19), partly stemming from the rupee depreciation against the US dollar, but the bottom line in dollar terms—the group’s functional currency— stayed put compared to the same quarter in the previous year.
Teejay Lanka, a unit of Brandix, reported earnings of 78 cents a share or Rs.550.9 million for the three months compared to 70 cents a share or Rs.493.5 million reported for the same period last year. This was an increase of 12 percent.


The top-line rose by 28 percent year-on-year (YoY) to Rs. 8.5 billion as the group utilized improved capacity, mainly in its Indian operations where capacity utilization was at the optimal level. Meanwhile, the company was also managed to improve its gross margins despite challenges in raw material prices and utility price increases. 

“Despite challenges in raw material prices and utility increases, the group enjoyed a gross profit growth of 20 percent recording Rs.1.0 billion compared to Rs.869 million in the previous year in quarter 3. 


The margin for the 3rd quarter has improved to 12.3 percent compared to the 11.2 percent on a quarter-on-quarter basis as a result of better loading and improved mix with both US and EU business units,” Teejay Lanka Chairman Bill Lam said in an earnings release. 


Over many quarters, the company’s margins and profits were impacted by the rising cotton yarn prices – the key raw material used in weft knit fabric making – and the heightened competition too had a bearing on the performance. 


Despite the growth in the earnings in rupee terms – group’s reporting currency – the earnings in dollar terms – its functional currency – the currency in which the company conducts its business, showed no growth. 


The after-tax profit in dollar terms for the quarter was flat at US $ 3.3 million on revenue of US $ 49.5 million, up 13 percent YoY.


Sri Lankan rupee depreciated by a record 19 percent against the US dollar in 2018, requiring more units of rupees to buy a dollar unit.  


Meanwhile, for the nine months ended December 31, 2018, Teejay Lanka group reported earnings of Rs.1.79 a share or Rs.1.26 billion, recording an increase of 16 percent YoY.


The revenues rose 26 percent YoY to Rs.22.9 billion. 


In dollar terms, the group’s earnings rose 8 percent YoY to US $ 7.7 million.


Revenues in dollar terms rose by 18 percent YoY to US $ 141.9 million. 


The group foresees certain challenges in the ensuing period from the revenue mix and raw material price volatility continuing. The company is also concerned about the rising utility costs. 


As at December 31, 2018, Brandix Lanka Limited held 33.08 percent stake in Teejay Lanka while Pacific Textured Jersey Holdings Limited held 27.91 percent stake. 

 

 

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