Teejay Lanka PLC reported solid performance for the quarter ended December 31, 2019, sustaining the momentum it gained more than two years ago as the company pushed its top and bottom lines further ahead.
The weft-knitted fabric maker for global brands reported revenues of Rs.8.9 billion for the quarter under review, compared to Rs.8.5 billion in the year earlier period, registering a 5 percent growth.
The company reported earnings of Rs.1.02 a share or Rs.718.9 million for the three months, compared to earnings of 78 cents or Rs.550.9 million in the corresponding quarter last year, registering a 31 percent year-on-year (YoY) growth in bottom line.
The company proposed an interim dividend of Rs.1.30 a share.
The company’s share ended 20 cents or 0.50 percent higher at Rs.40.20 yesterday.
Sustained expansion of top and bottom lines for nine quarters in a row is the result of an improved capacity, operational efficiencies and continuous expansion in the firm’s order book.
Stabilizing cotton prices—the firm’s key raw material – helped the margins and profits in particular during the quarter under review.
“The overall growth in the gross profit were primarily due to healthier mix, continued stabilisation of cotton prices, improved capacity generated through internal efficiencies with the commencement of the group’s operational excellence journey,” Teejay Lanka Chairman Bill Lam said.
The company also added capacity through its modernization strategy in Sri Lanka, which came into operation during the quarter under review, which increased the capacity in the upcoming quarter.
The company appears to be expanding its capacity expecting further stretched order books in the coming periods as Lam stated that its staff took increased visits to new and existing customers pushing up its travel and transport related costs.
The company must be working hard at courting new customers and strengthening bonds with existing ones.
Performance-based costs also increased during the quarter, the company stated.
Overall, the distribution expenses rose by 28 percent YoY to Rs.47.7 million while administration costs rose by 4 percent YoY to Rs. 375.3 million in the quarter.
The operating profits were up 15 percent YoY at Rs.824.7 million.
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.
They have 33.08 percent and 27.91 percent stakes in the company respectively.
Meanwhile, for the nine months ended December 31, 2019, Teejay reported earnings of Rs.2.79 a share or Rs.1.96 billion compared to earnings of Rs.1.79 a share or Rs.1.26 billion in the year earlier period. Sales rose 15 percent YoY to Rs.26.3 billion.
“The overall market sentiments remain highly competitive and to withstand challenging market dynamics, we are continuously improving our product portfolio and quality whilst constantly working on reducing our cost structure. Our customers are continuously searching for novel products which are cost-effective, challenging the selling prices,” Lam said.
Teejay Lanka aims US$ 300 million in annual revenues or beyond in the near future as it came close to US$ 150 million in revenues for the nine months.