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Textured Jersey 1Q FY 2014/15 profits drop on temporary slowdown; recovery already on track

Textured Jersey (Lanka) Limited

Textured Jersey Lanka PLC (TJL) reported a top line of Rs. 2.7bn for the quarter ended 30th June 2014 (1Q FY2014/15), 7% lower than that of last year. According to Mr. Bill Lam, Chairman of Textured Jersey, as cautioned in the last review, the main reason for this was the spill-over effects of the temporary slowdown in the US demand due to abnormal weather in the early part of the calendar year.


He further stated that the drop in volumes had a compounding effect on the bottom line, contributing to a 32% year-on-year drop in net profit to Rs. 164mn for 1Q FY2014/15. However, demand from the US has already recovered and TJL expects its original performance trajectory to regain momentum in the coming quarters.


During the quarter under review, as a result of the drop in sales volumes, gross profit came in at Rs. 219mn, representing a margin of 8.2%, compared to 12.1% in the corresponding quarter of last year. The cascading effect of the reduced gross profit resulted in operating profit for the quarter reducing to Rs. 123mn compared to Rs. 228mn during the same period of last year. This was despite administrative and distribution expenses reducing by 18% year-on-year to Rs. 107mn for 1Q FY2014/15.


TJL’s strong cash generation ability enabled the company to maintain its near debt free balance sheet as at the quarter end, with a strong net cash position of Rs. 1.86bn, up 5% from a year before. However, owing to lower interest rates and exchange rate fluctuations during the period, net finance income for 1Q FY2014/15 was Rs. 17.6mn, 26% lower than that of last year. According to Mr. Lam, the combination of the net finance income and Rs. 20.6mn of non-operating income consisting of the technical service fees from Ocean India brought the net profit for the period to Rs. 164mn, still 32% lower than the corresponding period of last year.

Mr. Lam concluded by stating that with the US demand back on track, combined with the 10-12% capacity additions and the savings from the multi-fuel boiler plant, TJL should be able to regain its growth momentum and continuously add value to the shareholders in the upcoming quarters.



 

 

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