JAT Holdings posts highest-ever revenue for Q1 2023 amidst economic crisis

JAT Holdings PLC, guided by its highly-experienced and skilled corporate management team, has achieved its highest-ever first-quarter revenue in FY 2022/23. The Group has also performed exceptionally well, across a range of other financial performance indicators, defying industry trends, amidst a highly challenging economic environment.

Total Revenue for Q1 grew by 39 per cent to Rs. 1.935 billion, against Rs. 1.396 billion in the corresponding quarter in the prior year, while Gross Profit in absolute terms rose by 37 per cent to Rs. 525.6 million, against Rs. 382.6 million in Q1 of FY 2021/22. Gross Profit Margins were maintained unchanged at 27 per cent, despite mounting domestic and external challenges such as Sri Lanka’s multiple crises of economy, energy and foreign exchange, compounded by a global scarcity of raw materials, the company said in a statement.

Meanwhile, operating profit grew by 50 per cent during the period under review to Rs. 280.2 million, up from Rs. 186.75 million in the corresponding period. However, Operating Profit Margin growth was subdued, but still recorded an expansion to 14 per cent, up from 13 per cent. This was as a result of various economic relief packages and facilities provided to employees making it the highest ever increase in salaries, coupled with rising inflation costs and exchange rate volatility. Profit Before Tax (PBT) grew by 18 per cent, demonstrating a sustained momentum of recovery, to Rs. 198.8 million, compared with Rs.168.9 million earlier, although Margins contracted slightly, from 12 per cent in the corresponding period, to 10 per cent during the period under review, as a result of the worsening economic environment.

Discussing the strategic positioning of the Group and its Q1 performance, CEO, Nishal Ferdinando said, “Through our skilful and agile manoeuvring, and by leveraging the expertise and experience of our management team, we have continued to deliver exceptional excellence to all our stakeholders, including our customers, amidst the worst economic crisis that Sri Lanka, or we as an organisation, have ever faced. Through foresight and experience, we anticipated the present crises, based on economic indicators and on-ground information. Thus, we immediately rallied our people and our supply chain partners to secure adequate raw material stocks for at least 8 months, which we were able to achieve thanks to our strong financial position, which was further consolidated as a result of our IPO. In fact, the cash infusion from our IPO, has ensured low gearing, thus a reduction in financing costs, helping us to remain relatively unburdened amidst a tightening monetary environment.”

Just over a year ago, in July 2021, JAT Holdings launched its IPO, which saw the company successfully raise Rs. 2.2 billion, amidst a oversubscribed issue, through the sale of 82,904,846 ordinary shares at a price of Rs. 27 per share. These funds have since been used for setting up an R&D centre, commissioning a manufacturing facility in Bangladesh and channelled towards market development initiatives for the Group’s new flagship brand, WHITE by JAT.

“We also have gone above and beyond, as an employer of choice, to ensure that our people are provided with adequate cushioning during the crisis,” added Mr. Ferdinando, “We have provided financial relief schemes, along with relief in other forms such as flexible work, access to essential items, moral and emotional support, and an overall sense of security in employment. This has helped us to work better as a team and continue to deliver what is expected of us, by customers and all other stakeholders.”

Revenue Breakdown

Group Export Revenues dipped slightly during Q1, by 12 per cent, as a result of reorganisation due to the commencement of operations at the Group’s manufacturing facility in Bangladesh, owned and operated through its fully-owned subsidiary, Asia Coatings (Pvt) Ltd. However, export revenues are forecasted to improve drastically as operations at the new facility get up to speed. Additionally, the Group has placed a strategic focus on developing its export operations, in order to further consolidate its financial and operating position over the rest of the year.

Revenues from the Group’s Sri Lankan operations expanded by a significant 59 per cent to Rs. 1.576 billion in Q1 of FY 2022/23, up from Rs. 989.3 million in the corresponding period. This was driven by increased sales, coupled with the effects of input price inflation.

Commenting on the progress, Founder and Managing Director of JAT Holdings PLC, Aelian Gunawardene said, “We are pleased to communicate to investors that we have made excellent progress with regard to our IPO Objectives. Construction on our Bangladesh manufacturing facility has been completed, and the facility commissioned, ahead of schedule. We look forward to reaping the benefits of enhanced production capacity and capability at our new facility in the coming months. Work has also already begun on our R&D centre, and we expect it to be completed within the next two months, again ahead of schedule and much lower than was initially budgeted. We have also used funds from the IPO to add value and build our flagship WHITE by JAT brand, and this has paid off handsomely.”