Textured Jersey June net profit up 26%

Weft knit manufacturer Textured Jersey Lanka PLC (TJL) reported a net profit of Rs.206 million for the quarter ended June 30, 2015 (1Q16), up 26 percent year-on-year (yoy).

Basic earnings per share improved to 31 cents from 25 cents.

According to TJL Chairman Bill Lam, the company achieved two key strategic milestones during the year; announcing the acquisitions of Ocean India (Private) Limited (OCI) and Quenby Lanka Prints (Private) Limited (QLP).

During 1Q16, pursuant to the conclusion of all legal and regulatory formalities, TJL was able to consolidate QLP as a wholly owned subsidiary of TJL with effect from 1st June 2015.

Accordingly, for 1Q16 TJL recorded consolidated revenue of Rs.2.8 billion.

For t he quarter under review, on a standalone basis TJL recorded a net profit of Rs.189 million up 15 percent yoy.

This result was achieved on the back of a topline of Rs.2.7 billion representing a 2 percent yoy increase, while the gross profit came in at Rs.297 million, up 36 percept compared to the same period last year.

The increase in gross profit could be directly attributable to the improved margins achieved during the quarter under review.

According to Lam, this reflects the impact of the previously expanded manufacturing capacity now translating to bottom line margins.

With QLP results being consolidated with effect from 1st June 2015, the consolidated gross profit for TJL for the quarter ended 30th June 2015, came in at Rs.323 million.

Lam further stated that, despite the increase in administrative expenses due to systems and processes being strengthened to accommodate the planned expansion strategy, the strong performance at gross profit level allowed TJL to post an operating profit of Rs.171mn up 39 percent yoy on a standalone basis. On a consolidated basis, TJL reported an operating profit of Rs. 188 million.

TJL continued to maintain a strong balance sheet as at June 30, 2015, with Rs.3.4 billion in cash and zero long term debt. However Rs.1.4 billion of short term debt was added to manage and optimize the timing effects of cash flows and investments.

Despite the better cash position versus a year before, lower interest rates led to net finance income dropping 51 percent to Rs.8.7 million compared to 1Q15.

Commenting on expansion plans, Lam highlighted that the business integration and value creation process of QLP is well underway while all the ground work has been laid to commence the ramp up of the integration process with OCI.

He concluded by stating that the TJL management is encouraged by the positive responses given by its customers towards the recent acquisitions and remain confident that the steps taken will lay a solid foundation for long term growth.