Hot after a successful initial public offering, Textured Jersey Lanka PLC has recorded a top line growth of 33 percent year-on-year to Rs. 2.7 billion for the first quarter of the 2011/12 financial year with net profits growing 136 percent, and this despite rising costs (31 percent mainly on cotton prices) as the company was able to pass them to customers because of high quality production and delivery.
"The company followed a focused change in its product and marketing strategy, and achieved satisfactory results. These results were achieved not only by hard work, but even more importantly, by the unrelenting discipline and focus shown by all," the company’s chairman Ashroff Omar told shareholders.
"The US market was proactive during the quarter and significantly outperformed the EU in earnings growth. The company also benefitted from a 30 percent price increase which demonstrated its ability to pass on negative external impacts on its cost structure to customers. This was possible mainly due to the level of quality the company maintains in production as well as delivery, which makes it a preferred supplier of fabric to most of the well-known brands in the world. We are committed to maintaining our focus and continuously staying close to our customers," he said.
"The unprecedented growth experienced has allowed us to improve our operating results by every important measure. The gross profit of the company grew to Rs. 251million during the quarter from Rs. 161million during the same quarter of the previous year. This represents a growth of more than 56 percent. The most impressive point to note is that the company was able to achieve this growth on the back of an increase of almost 31 percent in its cost of sales. This increase was mainly as a result of the increase in prices of cotton which is the primary raw material used by Textured Jersey.
"The company put in place a number of cost saving initiatives during the quarter, in addition to well thought-out improvements to its processes. Significant savings of costs were made by the management in utilization of dyes and chemicals, machinery maintenance, packaging and transportation. The improvements made to processes also helped achieve substantial cost savings. These measures were largely responsible in keeping the SG&A Overheads of the company almost unchanged even with a growth in top line.
"This also translated to a growth in operating profits of over 140 percent to Rs. 156m million from Rs. 64 million during the same quarter of the previous year. We have learned to shut out the things that are outside our scope and focus on those that we can influence. The above figures are a clear indicator of this focus," Omar said.
"Finance costs of the company saw an increase during the year to Rs. 12 million which was mainly due to a conscious decision made by the company to increase its raw material inventory due to the rapid fluctuations that were witnessed in cotton prices and also the shortage of cotton in the market. This policy also contributed to the increase in finance costs of the company. However, the strong operational results of the company positively impacted its bottom line as well, with net profit recording a growth of 136 percent. The net profit recorded during the quarter was Rs. 144 million compared to Rs. 61 million in the same quarter of the previous financial year."
source - www.island.lk
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