Textured Jersey posts Rs. 240 m net profit in Q1

Textured Jersey Lanka PLC (TJL), a manufacturer of knit fabric, started the new financial year posting an impressive Rs. 240 million net profit for the quarter ended June 30, 2013 (1Q FY2013/14), representing a strong 40% year-on-year growth, according to results released to the Colombo Stock Exchange (CSE)

Increased sales revenue, improved margins from higher capacity use stemming from increased sales volumes and TJL's strong financial position were identified as the main reasons for its robust year-on-year performance.

During the quarter under review, the company declared a Rs. 0.58 per share final dividend for the last financial year ended March 31, 2013, bringing the annual dividends to Rs. 1.24 per share, a 80% pay-out of the FY2012/13 full year profit.

Chairman TJL, Bill Lam said that higher sales volumes compared to the corresponding period of the past year enabled TJL to achieve Rs. 2.9 billion in sales revenue for 1Q FY2013/14, up 10% year-on-year.

A statement issued by the chairman, said that the higher volumes also resulted in gross profit margins improving to 12.1% in 1Q FY2013/14 versus 10.3% in the corresponding quarter of last year.

It stated the main reasons for the improvement were higher levels of efficiency and the wider distribution of fixed overheads as a result of higher capacity loading. As per the release, TJL's gross profit for 1Q FY2013/14 reached Rs. 348 million, up 29% year-on-year.

It stated that the positive impact of the higher sales volumes and improved gross margins flowed down to the operating profit level, resulting in an operating profit margin of 8.0% for 1Q FY2013/14 compared to 6.3% during the corresponding period of the previous year. TJL also reported a strong operating profit of Rs. 228 million for the quarter under review, representing a 39% year-on-year growth.

It stated that the company retained a healthy cash balance of Rs. 1.7 billion as at June 30, 2013 and that it had completely settled short and long-term borrowings at the end of the period. According to his statement, this lowered the finance expense to an almost non-material level for 1Q FY2013/14, which allowed the company to record a net finance income of Rs. 23.7 million for the quarter, up 200% year-on-year.

Summing up the quarterly result, it stated that the higher operating profits and the strong cash position allowed TJL to record a net profit of Rs. 240 million for 1Q FY2013/14, 40% higher than the corresponding quarter of last year.

The continued interest from TJL's main customers - Victoria's Secret, Marks and Spencer, Intimissimi and Decathlon, combined with the growth potential of emerging customers, makes TJL's management confident of strong demand for the next period as wel, it stated.. Referring to strategic initiatives, it stated that the construction of TJL's multi-fuel boiler plant was progressing according to plan.The plant is expected to reduce TJL's energy cost substantially when commissioned. It stated that TJL had commenced adding capacity through subcontracting, while building long-term relationships.

"This process, while addressing immediate capacity constraints, is expected to enable TJL to further evaluate long term options", a spokesman for the company said.