Textured Jersey Lanka PLC (TJL) recorded net profit of Rs. 805mn for the nine month period ended 31st December 2013, up 16.0% year on year supported by strong growth in turnover. Net profit for the quarter ended 31st December 2013 (3Q FY2013/14) was Rs. 301mn, representing a decline of 17.4% year on year, compared to the above average corresponding quarter last year. 3Q results in the previous year were significantly above average due to benefits from lower yarn prices, depreciation of the Sri Lankan rupee and a reversal in stock provisions.
During the quarter under review, TJL continued to record higher sales volumes as compared to the previous year. This resulted in sales for 3Q FY2013/14 reaching Rs. 3.4bn, 16.7% higher than that of last year, placing the FY2013/14 nine month period cumulative sales figure at Rs. 9.5bn, up 19.7% year on year.
TJL’s gross profit for the nine month period ended 31st December 2013 was at Rs. 1.1bn, a healthy 15.0% increase over the corresponding period last year. The reported gross margin for 3Q FY2013/14 slid to 10.6% due to an increase in outsourced business. While outsourced business generates incremental value, it impacts the overall profit margin due to a lower level of in-house value addition. The gross margin excluding outsourced business is 11.9%, which is on par with the FY2012/13 average gross margin of 11.6%. It must be noted that due to one off gains from lower yarn prices, depreciation in the Sri Lankan rupee and reversal in stock provisions, gross margin in 3Q last year experienced a temporary spike to 15.7%.
Continuous enforcement of strict cost controls enabled TJL to maintain its 3Q FY2013/14 distribution and administrative expenses at Rs. 19mn and Rs. 82mn, respectively, the same level as the corresponding quarter last year. The cumulative operating profit for the nine months ended 31st December 2013 was Rs. 766mn, an increase of 14.7% year over year.
Owing to a near debt-free balance sheet and a healthy cash position throughout the period, TJL was able to record Rs. 22mn in net finance income for 3Q FY2013/14, representing a substantial 95.1% growth year on year. As at 31st December 2013, the company had no borrowings and a strong cash position of Rs. 2.3bn.
TJL recorded a net profit of Rs. 301mn for 3Q FY2013/14, down 17.4% year over year. Net profit for the nine month period ended 31st December 2013 remained strong at Rs. 805mn, up 16.0% compared to the corresponding period last year. TJL’s order book for the fourth quarter remains healthy and the management is confident of surpassing last year’s bottom line milestone of Rs. 1.0bn, despite the above average performance last year.
TJL management has kicked off a few key strategic initiatives in order to enter the next phase of growth. The capacity expansion and modernization project is currently underway and is expected to be completed in March 2014. The initiative is aimed at increasing capacity by 10-12%, which will enable TJL to reduce its outsourced orders and improve margins, as well as take on new customer orders which are currently refused due to capacity constraints. In addition, the construction of TJL’s multi-fuel boiler plant is progressing with amendments to timelines compared to the original plan. The plant is expected to reduce TJL’s energy cost substantially when commissioned and reduce dependency on the national grid.
TJL entered into a Technical Service and Management Agreement with Ocean India Private Ltd, a knit fabric manufacturer located in India. This arrangement is expected to provide TJL with knowledge and experience in regional markets. Given the above factors, TJL management remains confident of maintaining growth and delivering value to shareholders on a continuous basis.
During the quarter under review, TJL continued to record higher sales volumes as compared to the previous year. This resulted in sales for 3Q FY2013/14 reaching Rs. 3.4bn, 16.7% higher than that of last year, placing the FY2013/14 nine month period cumulative sales figure at Rs. 9.5bn, up 19.7% year on year.
TJL’s gross profit for the nine month period ended 31st December 2013 was at Rs. 1.1bn, a healthy 15.0% increase over the corresponding period last year. The reported gross margin for 3Q FY2013/14 slid to 10.6% due to an increase in outsourced business. While outsourced business generates incremental value, it impacts the overall profit margin due to a lower level of in-house value addition. The gross margin excluding outsourced business is 11.9%, which is on par with the FY2012/13 average gross margin of 11.6%. It must be noted that due to one off gains from lower yarn prices, depreciation in the Sri Lankan rupee and reversal in stock provisions, gross margin in 3Q last year experienced a temporary spike to 15.7%.
Continuous enforcement of strict cost controls enabled TJL to maintain its 3Q FY2013/14 distribution and administrative expenses at Rs. 19mn and Rs. 82mn, respectively, the same level as the corresponding quarter last year. The cumulative operating profit for the nine months ended 31st December 2013 was Rs. 766mn, an increase of 14.7% year over year.
Owing to a near debt-free balance sheet and a healthy cash position throughout the period, TJL was able to record Rs. 22mn in net finance income for 3Q FY2013/14, representing a substantial 95.1% growth year on year. As at 31st December 2013, the company had no borrowings and a strong cash position of Rs. 2.3bn.
TJL recorded a net profit of Rs. 301mn for 3Q FY2013/14, down 17.4% year over year. Net profit for the nine month period ended 31st December 2013 remained strong at Rs. 805mn, up 16.0% compared to the corresponding period last year. TJL’s order book for the fourth quarter remains healthy and the management is confident of surpassing last year’s bottom line milestone of Rs. 1.0bn, despite the above average performance last year.
TJL management has kicked off a few key strategic initiatives in order to enter the next phase of growth. The capacity expansion and modernization project is currently underway and is expected to be completed in March 2014. The initiative is aimed at increasing capacity by 10-12%, which will enable TJL to reduce its outsourced orders and improve margins, as well as take on new customer orders which are currently refused due to capacity constraints. In addition, the construction of TJL’s multi-fuel boiler plant is progressing with amendments to timelines compared to the original plan. The plant is expected to reduce TJL’s energy cost substantially when commissioned and reduce dependency on the national grid.
TJL entered into a Technical Service and Management Agreement with Ocean India Private Ltd, a knit fabric manufacturer located in India. This arrangement is expected to provide TJL with knowledge and experience in regional markets. Given the above factors, TJL management remains confident of maintaining growth and delivering value to shareholders on a continuous basis.
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