Textured Jersey Lanka PLC (TJL) reported a strong 16% year-on-year growth in net profit to Rs. 805mn for the nine month period ended 31st December 2013, supported by robust growth in turnover. The company maintained its generous dividend pay-out policy and declared an interim dividend of Rs. 0.50 per share representing 41% of the net profit for the nine months. According to Mr. Bill Lam, Chairman of Textured Jersey, the company's strong balance sheet enabled a substantial dividend pay-out despite a year of heavy investment in key strategic initiatives.
The company's capacity expansion and modernization project, aimed at increasing capacity by 10-12%, is on track to be completed in March 2014. In addition, the construction of TJL's multi-fuel boiler plant is expected to be completed in the next few months, which will lead to substantial energy cost reductions. The company 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.
During the quarter under review, TJL continued to record higher sales volumes as compared to the previous year. Sales for 3Q FY2013/14 reached 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. The company maintained a healthy 8.1% operating profit margin for the nine month period ended 31st December 2013, causing a 14.7% growth in operating profit to Rs. 766mn.
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 per the results released, as at 31st December 2013, the company had no borrowings and a strong cash position of Rs. 2.3bn.
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 of 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. However, net profit for the nine month period ended 31st December 2013 displayed a strong 16% year-on-year growth pushing up the net profit to Rs. 805mn.
Mr. Lam stated that 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. 1bn. Another strong year of results combined with the implementation of key strategic initiatives would add tremendous value to shareholders and act as a platform for continuous future growth.