Resilient Teejay bounces back inQ2 amidst 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 30th September 2023, reflecting a gain of Rs 1.9 billion over the pre-tax loss of Rs 701 million in the preceding quarter, recording quarter-on-quarter growth of 275%.

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%.

Revenue for the quarter reviewed, at Rs 15.5 billion, was up 11% over the preceding quarter’s figure of Rs 14 billion, Teejay Lanka PLC said in a filing with the Colombo Stock Exchange (CSE).

Commenting on the Group’s second quarter turnaround, Teejay Lanka Chairman Mr AjitGunewardene 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.

Teejay Lanka Chairman Mr AjitGunewardene and Teejay LankaCEO Mr Pubudu De Silva

He attributed these decreasesto a drop in sales volume driven by present market conditions, the appreciation of the Sri Lanka Rupee, and underutilisation of capacity. “The on-going industry volatilities have posed persistent challenges,” Mr 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 ina 121% increase in taxes for the Group.

For the six months ending 30th September 2023, Teejay Lanka reported revenue of Rs 29.5 billion, profit before tax of Rs 522.9million, and net profit of Rs 90 million, reflecting declines of 39%, 81% and 96% 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 equivalents balance of Rs 12.9 billion.

Elaborating on the second quarter recovery achieved by the Group, Teejay LankaCEO Mr Pubudu De Silva said strategies such as identifying new customers, introducing new product segments,capacity management and optimisation andinventory 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.

Teejay Lanka was the first textile manufacturer in Sri Lanka to receive membership of the US Cotton Trust Protocol, and is a public quoted company with 40 per cent public ownership. The company is backed by Sri Lanka’s largest apparel exporter Brandix Lanka which has a 33 per cent stake. Pacific Textiles of Hong Kong, whose key shareholder is the Tokyo Stock Exchange listed Toray Industries Inc., owns 27 per cent of Teejay Lanka.

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