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.

In a media release, Sri Lanka’s only multinational textile producer said profit before tax was Rs. 2.9 billion at group level for the 12 months ending March 31, 2020, reflecting impressive growth of 29 per cent over the preceding year, a remarkable achievement considering that pre-tax profit for the final quarter was down 24 per cent 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 per cent, after paying income tax of Rs. 528.7 million, which was up 33 per cent over that of the previous year. Net profit for the quarter at end March 2020, at Rs. 421.7 million, reflected a decline of 30 per cent.

Teejay Lanka Chairman 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. 

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.