Teejay bounces back in 2Q amid improving industry sentiments

Top textile maker Teejay Lanka PLC has achieved a remarkable recovery from its first quarter losses to post strong top and bottom line figures for the second quarter of 2023-24.
Sri Lanka’s first multinational textile manufacturer has reported profit before tax of Rs.1.2 billion for the three months ending on September 30, 2023, reflecting a gain of Rs.1.9 billion over the pre-tax loss of Rs.701 million in the preceding quarter, recording a quarter-on-quarter growth of 275 percent.

The group’s net profit of Rs.943 million for the three months was a gain of Rs.1.8 billion over the net loss of Rs.853 million reported for the first quarter of 2023-24 and represented a quarter-on-quarter gain of 211 percent. However, on a year-on-year basis, the net profit was down 14 percent.

Revenue for the quarter reviewed, at Rs.15.5 billion, was up 11 percent over the preceding quarter’s figure of Rs.14 billion, Teejay Lanka PLC said in a filing with the Colombo Stock Exchange. Commenting on the group’s second quarter turnaround, Teejay Lanka Chairman Ajit Gunewardene said it was the result of a series of strategic initiatives implemented during the quarter as well as changing market conditions generating optimism for improved performances in the upcoming quarters, even though the second quarter’s and first half’s figures were lower than those of the corresponding periods of last year.
He attributed these decreases to a drop in sales volume, driven by present market conditions, appreciation of the Sri Lanka rupee and underutilisation of capacity. 
“The on-going industry volatilities have posed persistent challenges,” Gunewardene said, “but our performance in the second quarter highlights the positive momentum and growth within the group, demonstrating its resilience in a challenging economic backdrop.”
The group expressed concern about the changes in taxation during the quarter under review, with the introduction of a new tax policy, resulting in a 121 percent increase in taxes for the group. For the six months ending on September 30, 2023, Teejay Lanka reported revenue of Rs.29.5 billion, profit before tax of Rs.522.9 million and net profit of Rs.90 million, reflecting declines of 39 percent, 81 percent and 96 percent, respectively over the first half of 2022-23.

However, the Teejay group has presented a strong balance sheet, concluding the period under review with a noteworthy cash and cash equivalent balance of Rs.12.9 billion.
Elaborating on the second quarter recovery achieved by the group, Teejay Lanka CEO Pubudu De Silva said strategies such as identifying new customers, introducing new product segments, capacity management and optimisation and inventory management while investing in advanced infrastructure and enhancing the necessary skills and expertise to adapt to evolving industry dynamics had contributed to the turnaround. 
“These efforts have positioned Teejay to effectively meet the changing needs of Sri Lanka, India and our sales office in Bangladesh,” he added.