Textured Jersey doubles net profits for 2Q FY 2012/13
Textured Jersey Lanka PLC (TJL), Sri Lanka’s premier manufacturer of
knit fabric, demonstrated its operating excellence by doubling net
profits for the quarter ended September 30, 2012 (2Q FY2012/13), as per
the financial results released to the Colombo Stock Exchange (CSE). The
company recorded a net profit of Rs. 157 million for the quarter versus
Rs. 78 million during the same period in the last financial year, a feat
achieved despite the slowdown in the global economic environment.
TJL was able to improve margins at every level for the quarter. Gross
profits reached Rs. 210 million for 2Q FY2012/13, up 7 % year on year,
despite a 29 % decline in sales revenues. Gross profits were also up 10
% year-on-year for the first half (1H) of FY 2012/13 as well. In his
release to the CSE, Textured Jersey Chairman Ashroff Omar cited improved
production efficiencies, stricter management of overheads, lower yarn
costs and the Sri Lankan rupee depreciation as the reasons behind this
improvement.
Operating profits for 2Q FY2012/13 increased by a significant 86 %
compared to the same period in the last financial year. This was
achieved through a substantial 49 % year-on-year reduction in
administrative expenses and a 43 % reduction in distribution expenses
for 2Q FY 2012/13. These reductions were attributed to stricter cost
controls and a reversal in provisions.
Additionally, through strong cash flows and working capital
management, TJL was able to reduce debt and generate a finance income of
Rs. 7.1million for the quarter, as opposed to a Rs. 2.4 million finance
cost during the same period in the last financial year. Omar mentioned
that this was achieved through a significant reduction in short-term
borrowings to Rs. 178 million as at September 30 2012 from Rs. 1.7
billion as at September 30 , 2011, and the complete elimination of
long-term borrowings.
The combined result of margin improvements through operating
efficiencies, frugal cost management, strong working capital and cash
management enabled TJL to record an impressive 101 % year-on-year
increase in net profits for 2Q FY2012/13. Net profits were also up 48 %
year-on-year for 1H FY2012/13 as well.
Looking towards the next quarter, Omar’s statement said, “Even though
market conditions are likely to remain challenging next quarter,
management is confident of a boost in sales volume owing to a strong
order book with renewed interest from TJL’s top clients, which include
Victoria’s Secret, Marks &Spencer, Intimissimi and Decathlon”.
He also mentioned that TJL was likely to continue on a strong profit
growth trajectory for the next quarter as well, owing to the diligent
management of operating costs and overheads.
On a more strategic note, Omar mentioned that the conceptual designs
and regulatory approvals for TJL’s multi fuel boiler plant have already
been completed and construction is expected to commence in 3Q FY2012/13.
Once operational, this project is expected to reduce TJL’s energy
costs substantially. Further, according to the statement, the acquiring
of a fabric mill within the region as a part of TJL’s expansion strategy
is moving forward according to schedule.
Omar concluded his review by stating that the management of TJL
remain confident that with the current diligent planning, process
streamlining and efficient controls in place, the company will continue
to enhance shareholder value and deliver strong results in the coming
quarter as well.
|