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2nd February 2015, Sri Lanka

Textured Jersey reports record quarter

Textured Jersey Lanka PLC (TJL), a leading knit fabrics producer, has reported a net profit of Rs. 376 million for the quarter ended 31 December 2014, a significant increase of 25% compared to the same period last year.

According to Bill Lam, Chairman of TJL, a combination of increased margins and strong revenue growth enabled the company to achieve the positive results for the third quarter of 2014/15.

The strong performance at gross profit level also enabled TJL to post an operating profit of approximately Rs.354 million.

Mr Lam also stated that with demand from its main customers back on track, TJL was able to record a strong revenue growth of 12% year-on-year for the third quarter and report an impressive Rs. 3.8 billion in sales.

Strong performance

The better demand conditions enabled TJL to improve its product mix and achieve higher levels of production efficiencies through optimal capacity utilisation and planning, the company reports.

This in turn allowed the company to expand its gross profit margins to 12.8% from 10.6% of last year, causing gross profit to rise 34% to Rs. 481 million for the third quarter of 2014/15.

The strong performance at gross profit level also enabled TJL to post an operating profit of approximately Rs.354 million and record 34% year-over-year growth at the operating profit level. According to Mr Lam, this was achieved despite a 25% year-on-year increase in administrative and distribution expenses.

Finance income

The company continued to maintain its near debt-free balance sheet as at 31 December 2014, with a net cash position of Rs.1.65 billion. TJL's strong cash generation ability has enabled it to increase its net cash position by 33% compared to Rs.1.24bn recorded as at 30 September 2014. However, due to increased levels of investment and working capital, the net cash balance was 29% less compared to the same period of the previous year.

Lower interest rates, combined with a lower cash position, contributed to net finance income coming in at Rs. 9 million, compared to Rs. 22 million in the corresponding quarter of last year.

The quarter closed at a net profit of Rs. 376 million, a significant increase of 25% from last year, pushing up the net profit for 9 months ended 31 December 2014 to Rs.822 million, putting it back on track to achieve a strong annual performance despite the setbacks during the early part of the year.

Strategic initiatives

Commenting on the strategic initiatives, Mr Lam highlighted that the operational ramp up of the multi-fuel boiler is progressing well though slightly behind schedule. This was due to the fine tuning work being undertaken to achieve the envisaged level of efficiencies during the testing phase. The plant is expected to commence full scale operations in the coming quarter.

He concluded by stating that with TJL's additional capacity of 10-12%, coupled with the continuous focus on improving its capabilities and demand from its main markets back on track, the management is confident that the company will continue its growth.

www.texturedjersey.com

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