ECONOMYNEXT – Teejay Lanka’s net profit rose three percent to 3.4 million US dollars in the March 2019 quarter from a year ago as the cost of its main raw material, cotton yarn, stabilised and product prices were raised.
The Sri Lankan fabric supplier’s sales in the quarter were up 15 percent to 49 million dollars, interim accounts filed with the stock exchange showed.
Growth in profits and sales were higher in Sri Lankan rupee terms, owing to currency effects. The rupee fell sharply against the dollar in 2018 but recovered somewhat this year.
March quarterly earnings per share were 86 Sri Lankan cents. Teejay Lanka’s share closed at 29.90 rupees Thursday, down 20 cents or 0.7 percent.
In rupee terms, Teejay Lanka’s net profit rose 19 percent to 606 million rupees in the March 2019 quarter from a year ago with sales up 35 percent to 8.8 billion rupees.
Stock brokers Bartleet Religare Securities said strong performance in Teejay Lanka’s Indian unit aided the top line growth which is mainly owing to the expanded capacity resulting in volume growth and on improved utilization rates.
“USD top line too witnessed an increase of 15 percent year-on-year to USD 49 million, however a three percent appreciation in the Sri Lanka rupee would have limited further growth in the group’s top line, we believe.”
In the financial year to March 2019, Teejay Lanka said EPS was 2.65 rupees with sales up 29 percent to 31.8 billion rupees and net profit up 17 percent to 1.9 billion rupees.
Teejay Lanka Chairman Bill Lam said in a statement described the year as “a very successful” one for Teejay, in which the group overcame challenging global market conditions through capacity expansion and internal measures.
“Prices of our main raw material, cotton yarn, increased in the beginning of the year and stabilised during Q4. Dyes and chemical costs increased significantly due to the challenges faced by the suppliers,” he said.
“We also saw utility prices increase during the year which was directly attributable to the global movement of fuel prices. Through process improvements and price revisions on finished goods, we were able to mitigate part of the cost escalation.”
(COLOMBO 17 May 2019)