Colombo - Teejay, Sri Lanka's largest circular knitter has reported solid revenue and net profit growth for its second quarter, driven by an increase in production capacity and stronger sales to EU and US markets.
Revenue in the second quarter of 2018-19 was up 25 per cent to Rs 7.6 billion, profit before tax was up 11 per cent to Rs 500.2 million and net profit increased by 15 per cent to Rs 425.5 million over the corresponding three months of the previous year, the company said.
Teejay Lanka Chairman Mr Bill Lam said this was the fourth consecutive quarter of revenue and net profit growth for the company in the face of stiff challenges, and was made possible by expanded capacity and a strong order book arising from the GSP facilities that it enjoys.
Although margins were impacted by raw material and utility cost increases in the second quarter, Teejay said it had been able to improve its gross margin to 11.3 per cent from 10.2 per cent in the corresponding quarter as a result of better loading and an improved mix, with its USA and EU business units increasing sales volumes.
“The increase in working capital was driven by inventories to support expanded capacity and a strong order book in the coming quarters which have historically been the Group’s peak months,” Mr Lam said, adding that cotton price volatility was expected to ease out towards the end third quarter while utility costs and the prices of dyes and chemicals were projected to increase. "Amidst these challenges, the Group is gearing up for its peak quarters with the GSP benefit, an anticipated surge in EU business, a strengthened customer portfolio, plans to bring in more business and fully exploit its expansion in India in the second half of the financial year," he said.
One of the region’s largest textile manufacturers, Teejay supplies fabric to some of the best international brands across the world. The company is part owned by Sri Lanka’s largest apparel exporter, Brandix Lanka, which has a 33 per cent stake and Pacific Textiles of Hong Kong which owns 28 per cent of the company.