Teejay ends 2019-20 with net profit up 28% despite COVID-19 impacted 4th quarter

Top textile manufacturer Teejay Lanka PLC has ended 2019-20 on an encouragingly strong note, despite its projected fourth quarter profit growth being eroded by production shutdowns at all plants in conformity with the lockdowns in Sri Lanka and India necessitated by the COVID-19 pandemic.

Sri Lanka’s only multinational textile producer has  reported profit before tax of Rs 2.9 billion at Group level for the 12 months ending 31st March 2020, reflecting impressive growth of 29% over the preceding year, a remarkable achievement considering that pre-tax profit for the final quarter was down 24% over the corresponding three months of 2019-20, to Rs 542.1 million.

The Group posted net profit of Rs 2.4 billion for the full year, an improvement of 28%, after paying income tax of Rs 528.7 million, which was up 33% over that of the previous year. Net profit for the quarter ending 31st March 2020, at Rs 421.7 million, reflected a decline of 30%.

Group revenue increased by a consistent 5% to Rs 33.3 billion for the 12 months reviewed, but was down by 21% to Rs 6.9 billion for the fourth quarter of 2019-20 on account of the suspension of both production and sales in March, the Company said in a filing with the Colombo Stock Exchange (CSE).

Teejay Lanka Chairman Mr Bill Lam commented that the unexpected decline in numbers in the fourth quarter was unfortunate as the Teejay Group was well in line to achieve its 10th consecutive quarter of growth in revenue and net profit had it not faced the unforeseen circumstance of the pandemic. “However, the Group had a very successful financial year achieving remarkable milestones, which included its highest revenue, highest gross profit and highest net profit for a financial year,” he said.

He disclosed that one of the highlights of the COVID-19 impacted fourth quarter was the generation of a considerable volume of orders from Nike and Uniqlo through the ‘Narrow & Deep’ strategy employed by Teejay, and the establishment of the footprint of these global brands on Teejay’s order book.

In a note to shareholders, Mr Lam also said the Group had donated fabric with its existing capabilities for  the production of 2 million face masks to protect medical staff and armed forces in Sri Lanka that are engaged in the battle against the spread of COVID-19.

Looking ahead, he said the pandemic will challenge the business in the coming months as most of the brands Teejay produces fabric for have had to shut their retail stores in the US and EU. Adapting to the changing environments, Teejay has ventured into a new endeavour of producing Personal Protection Equipment (PPE) to cater to international markets to supply the unprecedented current demand for these products.

As the manufacture of fabric is a mechanised process and the Teejay facilities extend to nearly 1.1 million square feet, the Group’s three production facilities are capable of manufacturing with their full work force amidst a COVID-19 environment, Mr Lam said.

Teejay Lanka CEO Mr Pubudu de Silva added: “While this pandemic has forced us all into a challenging period, the Teejay Group is placed in a strong position. With the team’s ability to innovate and create products, the Group’s new venture into the PPE market exploiting the years of experience in creating sophisticated fabric and its strength in the South Asian region together with its strong balance sheet will enable Teejay to withstand this turbulent period and achieve greater heights.”

Teejay Lanka was adjudged the Best Textile Exporter in Sri Lanka at the Presidential Export Awards presented by the Export Development Board (EDB) in 2019, moved up three places in the Business Today Top 30 companies ranking that year and was named among the 100 Most Respected Companies in Sri Lanka by LMD.

With manufacturing operations in Sri Lanka and India, Teejay is one of the region’s largest textile manufacturers, and supplies fabric to some of the best international brands across the world. Teejay Lanka PLC is a public quoted company with 39% public ownership. The company is backed by Sri Lanka’s largest apparel exporter, Brandix Lanka which has a 33% stake and Pacific Textiles of Hong Kong which owns 28% of the company.

An ISO 9001:2015, ISO 14001:2015 and OHSAS 18001:2007 compliant company and the first in the industry to develop green fabric, Teejay has been listed on the Colombo Stock Exchange (CSE) since 2011 and was included in the S&P Top 20 Index in Sri Lanka. The Company has also been named among the Forbes ‘200 Best under a Billion in Asia’ and been recognised as the ‘International Textile Firm of the Year’ and the ‘International Dyer and Finisher’ by World Textile Institute, London.