TJL Makes Rs. 628 Mn. PAT
In a recent announcement to the Colombo Stock Exchange, Textured Jersey Lanka PLC (TJL) declared a final Rs. 0.36 dividend per share, subject to shareholder approval.
This is in addition to a Rs. 0.12 interim dividend per share declared by the company in March this year, thereby totalling the dividend during the year to Rs. 0.48 per share. This gives a dividend pay-out ratio of 50% as per the published unaudited Rs. 628mn. profit for FY 2011/12 and a6.4% dividend yield at the current Rs. 7.50 share price. The 50% dividend pay-out is well in excess of the 1/3rd dividend pay-out policy that the company announced it would follow at its IPO in June 2011 and confirms the company’s commitment to enhance shareholder return and management’s confidence in the company’s outlook.
The company’s recently released quarterly results to the CSE saw it recording a 47% growth in profitability during FY 2011/12 4th quarter to Rs. 328mn. (excluding one off unrealised exchange losses) and a21% revenue growth to Rs. 3.1bn. Consequently, year’s net profit excluding unrealised exchange losses grew by 14% to Rs. 780mn for FY 2011/12 backed by a strong 31.8% growth in top line to Rs. 12.2bn.
TJL is also a beneficiary of the exchange rate depreciation as its price contracts with customers are denominated in US Dollars and the full benefit of this would only be seen during FY 2012/13.
Explaining this revenue growth, Chairman Ashroff Omar said, “The policy of strengthening its customer base has been beneficial for TJL whilst its longstanding relationships with its key customers have also been a valuable asset in uncertain times.”
The unrealised one off exchange losses recorded during the year as a result of the unexpected rupee devaluation amounted to Rs. 152 mn., the inclusion of which saw an 8% drop in reported profitability to Rs. 628mn.
As disclosed previously to the CSE, instead of the previous greenfield expansion plans, the management is currently actively pursuing inorganic expansion options within the South Asian region via an existing facility acquisition. Operational facilities acquisition which may now be available at a reasonable price following last year’s industry upheavals, should provide a faster return than organic expansion and yield optimal returns on IPO funds. Management is also evaluating options to set up a coal/bio mass boiler in order to offset the negative impact of the recent furnace oil price increase, while effective inventory management remains a priority with cotton prices having fallen to their lowest levels since February 2010.
