Sri Lanka’s Teejay Lanka June quarter net profits up 27-pct on GSP Plus
ECONOMYNEXT – Profits at Sri Lanka’s listed fabric maker Teejay Lanka grew 27 percent from a year earlier to 279.3 million rupees in the June 2018 quarter on improving demand for clothing exports to Europe and the US, and capacity expansion at its mill in India, interim accounts showed.
The company which operates fabric mills in Sri Lanka and India reported earnings of 40 cents a share in the June quarter, accounts filed with the Colombo Stock Exchange showed.
"The increased turnover is the result of capacity expansion in India and an increased order book generated from both US and EU, yielding the benefits of GSP through a carefully managed European customer portfolio, further driven by new product launches to US customers," said Chairman Bill Lam.
Teejay Lanka closed 50 cents lower at 32.10 rupees on Wednesday.
Revenue grew 26 percent in the quarter to 6.8 billion rupees and cost of sales increased 27 percent to 6.1 billion rupees, leading to gross profits growing 15 percent to 697.1 million rupees.
Despite revenue growth, margins were impacted by rising cotton prices.
"To yield better margins the group is also continuously re-calibrating its product portfolio and has taken steps to increase prices which will come into effect in the 2nd half of the financial year," Lam said.
Business dynamics are changing rapidly with short life-cycle orders and more demand for discounted programmes, Lam said.
Teejay Lanka is looking to enter new markets in Asia and Africa.
Other income grew 97 percent from a year earlier to 61.3 million rupees in the June quarter
Distribution expenses grew 11 percent to 37.7 million rupees and administration costs increased 23 percent to 367 million rupees.
Net finance cost fell 52 percent to 5.4 million rupees. (COLOMBO, 26 July 2018)