ECONOMYNEXT – Sri Lanka fabric maker Teejay Lanka said it earned profits of 310 million rupees in the June 2021 quarter, up from a loss of 31 million in the pandemic hit last year, but costs were rising as commodity prices went up.
The group reported earnings of 44 cents per share for the quarter. In the year to March the group reported earnings of 3.04 rupees on total profits of 2.1 billion rupees.
In the March 2021 quarter the firm reported earnings of 1.07 rupees on total profits of 760 million rupees.
The group said revenues rose to 10.3 billion rupees from 4.7 billion rupees a year earlier, but costs rose to 9.6 billion rupees from 4.4 billion, giving gross profits of 769 million rupees. In the previous quarter gross profits were 1.1 billion rupees.
“As predicted, raw materials and the cotton prices are at a peak level whilst the global market remains competitive with changing dynamics,” Chairman Bill Lam told shareholders.
“Group has foreseen these challenges during the last FY and strategically approached its customers to secure yarn prices to minimize the impact on profits and margins.”
Global commodity prices including cotton have risen in recent months as the Federal Reserve under Jerome Powell printed money despite a recovery in the US credit system sending domestic inflation above 5 percent.
The US Fed is the most destructive among major central banks having triggered the Great Depression after discovering open market operations in the 1920, the collapse of the Bretton Woods and ending the gold standard with commodity bubble (oil shock) in 1971 and the Great Recession (Housing bubble) in 2008.
In Sri Lanka revenues at Teejay was also helped by currency depreciation as the central bank of Sri Lanka printed money to defend a pattern of interest rates in Treasuries auctions.
“Revenue growth resulted mainly due to continuous operations of all three plants amidst the pandemic,” Lam said.
“Furthermore, the situation due to the pandemic in both Sri Lanka & India is volatile and the teams on the ground were navigating the pandemic to ensure that there were minimum impacts to the business by generating additional revenue from outsourced operations in Sri Lanka.
“However, the depreciation of the rupee helped to gain revenue.”
Orders were strong.
The continuous improvement on the order book is very much visible with the changes in the global supply chain moving towards the south Asian region and this influenced Teejay to record one of its highest turnovers in a quarter,” Lam said.
“I’m delighted to inform even in this turbulent environment expansion project in the India plant is within the planned timeline and the investments made are well in progress. These investments will undoubtedly position Teejay as the leader in the Textile arena in South Asia.” (Colombo/Aug06/2021)