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Textured Jersey ends another impressive year; continues generous dividend pay-out

Textured Jersey Lanka PLC (TJL)

Textured Jersey Lanka PLC (TJL) reported a strong 14% year-on-year growth in net profit to Rs. 1.2bn for the year ended 31st March 2014, supported by robust growth in turnover. The company's strong cash position has allowed TJL to maintain its trend of very generous dividend pay-outs with Rs. 0.80 per share being declared as the final dividend for FY2013/14. This boosted the total dividend for the year to Rs. 1.30 per share representing an impressive pay-out of 74% of total net profit for the year. According to Mr. Bill Lam, Chairman of Textured Jersey, the company managed another year of impressive results despite recent adverse weather conditions faced in the United States, softening retailer demand growth.

During the year under review, sales reached Rs. 12.7bn, 16% higher than that of last year. The company maintained its gross margin for FY2013/14 at 11% levels, and was able to achieve a 15% year-on-year growth in gross profit to Rs. 1.5bn. The gross profit for 4Q FY2013/14 also increased 14% year-on-year reaching Rs. 403mn. The same trend continued at the operating profit level, with FY2013/14 margins maintained around 8%, with Rs. 1.1bn reported as the annual operating profit, up 10% year-on-year. This annual operating profit was achieved on the back of a strong quarterly profit of Rs. 313mn for 4Q FY2013/14 up 9% year-on-year.

TJL's strong cash generation ability has enabled it to maintain a near debt-free balance sheet and a healthy cash position throughout the period. The company was able to record Rs. 91mn in finance income for FY2013/14, representing a substantial 15% growth year-on-year. As per the results released, the company had no borrowings and a strong cash position of Rs. 2.1bn as at 31st March 2014.

Net profit for 4Q FY2013/14 was Rs. 352mn, representing a growth of 9% year-on-year. Net profit for the year ended 31st March 2014 displayed a strong 14% year-on-year growth pushing up the net profit to Rs. 1.2bn.

The 10-12% capacity added through the modernisation and expansion project will be utilized during 1Q FY2014/15. In addition, with the revised timelines, the multi-fuel boiler plant should be in operation in 2Q FY2014/15. According to a statement released to the CSE by Mr. Lam, "The envisaged cost savings from the multi-fuel boiler plant and the added capacity places TJL on a strong footing for future profit growth".

Mr. Lam stated that TJL's orders for the first quarter of FY2014/15 remains healthy due to the strong European order book which will offset the cautious outlook of US retailers. He mentioned that some US retailers had taken a cautious approach for a few months, softening the demand on TJL's US business. Despite this, TJL's European order book continues to be strong, thereby mitigating the overall impact. In general, the management remains confident of another year of impressive growth, as the business has already recovered from the temporary impact in the first quarter.

Mr. Lam concluded by stating that a strong year of results combined with the implementation of key strategic initiatives would add tremendous value to the shareholders and act as a platform for continuous future growth for the company.



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