Textured Jersey Lanka PLC (TJL) has reported a top line of Rs. 3.5bn and net profit of Rs. 282mn for the quarter ended 30th September 2014 (2Q FY2014/15). According to Mr. Bill Lam, Chairman of TJL, this marked an emphatic recovery from the temporary setback suffered in the previous quarter, with sales up 29% and net profit up 72% on a quarter on quarter basis. Further, on a year on year basis the company was back on a strong growth trajectory with both sales and net profit up 7%.
Mr. Lam further stated that gross profit for 2Q FY2014/15 reduced by 2% year on year to Rs. 339mn, mainly due to lower margins arising from a combination of factors which included changes in product mix, outsourcing and higher dyes and chemical costs. However, the company managed to cut down its administrative and distribution expenses by 4% to Rs. 99mn, which resulted in the operating profit remaining at Rs. 249mn, on par with the corresponding quarter of last year.
TJL continued to maintain its near debt-free balance sheet as at 30th September 2014, with a strong cash position of Rs. 1.6bn, and only a temporary overdraft of Rs. 366mn. However, according to Mr. Lam, the cash balance was 21% less compared with the previous year, due to dividends and capital expenditure during the current quarter. As a result, net finance income for 2Q FY2014/15 was Rs. 16mn, 10% lower compared to last year. Lower interest rates also contributed to this reduction in net finance income. The other operating income consisting of technical service fees of Rs. 21mn, allowed TJL to close the quarter at a net profit of Rs. 282mn, an improvement of 7% from last year.
Commenting on strategic initiatives, Mr. Lam highlighted that the construction phase of the multi fuel co-generation boiler plant was successfully completed during the quarter and test operations had been commenced. The plant will be fully operational in the coming quarters and is expected to generate substantial savings in energy costs. Similarly, the recently added 10-12% capacity will be fully utilised during the coming quarters with US demand coming back on track.
He concluded by stating that with strategic investments made in recent times coming into fruition, combined with a strong focus on innovation, quality and execution, the management is confident that TJL will be able to continue its growth trajectory and create shareholder value for the foreseeable future.