Sri Lanka’s wood coatings market leader, JAT Holdings PLC, has had its best financial year ever, doubling its profit after tax (PAT) in financial year 2021/22.
Amid the toughest economic environment Sri Lanka has ever experienced, the company showed resilient performance, rising 66 percent to Rs.8.897 billion from Rs.5.36 billion last year.
Meanwhile, gross profit rose 58 per cent to Rs.2,603 crore compared to Rs.1,644 crore in FY2020/21, while operating profit rose 73 per cent. Most notably, JAT Holdings PLC increased its profit after tax by an astonishing 102 per cent to Rs.1,211 billion from Rs.600 million last year.
The company also saw an increase in export revenue during the year, which accounted for 23 percent of group revenue, up from 12 percent a year earlier, as the business shifts towards more export-oriented activity.
During the year, the company maintained its gross profit margin at 29 percent while operating income was limited at 13 percent due to input cost inflation and foreign exchange volatility during the period.
However, the company was able to make two separate interim distributions to investors during the year, valued at Rs.0.32 and Rs.0.25 per share. An analysis of growth in key sectors also showed that wood coatings grew 61 percent, decorative products (including WHITE by JAT) grew 77 percent and brushes grew 43 percent over the period, reflecting both volume and value growth.
Regarding the company’s financial performance, Founder and CEO Aelian Gunawardene said: “We are very pleased to report that we have delivered on our promise and commitment to our stakeholders made during our IPO. We have made a profit after tax of Rs. 1.2 billion as promised. Furthermore, we have reached this milestone in the midst of the worst economic crisis Sri Lanka has ever experienced.”
JAT Holdings PLC will embrace the current challenges and, where possible, turn them into opportunities and implement a forward-looking business strategy to solidify its position and remain resilient amid Sri Lanka’s many evolving crises.
Commenting on the business strategy, CEO Nishal Ferdinando said: “An important part of our resilience-oriented business strategy will be to focus on an export-oriented and international business in order to increase export earnings as much as possible in the short to medium term. This gives the company stability and the ability to excel. In fact, in the 2021/22 financial year, export earnings increased to 23 percent of group sales, which is a significant increase compared to the previous year, when the figure was only 12 percent.”
To support this strategy, JAT Holdings PLC has already implemented various initiatives in the Bangladesh market such as the establishment of a new state-of-the-art R&D facility and start-up of a manufacturing facility, as well as expansion into the retail market. In addition, the company is also working to develop its operations in Africa, with talks underway to commission a facility in the country. Together, these new facilities will further solidify the company’s position in the regional market while contributing to revenue and margin growth.
Regarding the company’s project line of business, JAT has announced that this division is unaffected by import restrictions as the company has sufficient inventory to ensure completion. In addition, projects involving the Board of Investment Companies are not subject to import controls and are pegged to the dollar. Therefore, these operations will continue as usual.
In the meantime, JAT Holdings PLC has taken serious and calculated measures to mitigate the impact of the various crises in Sri Lanka on the company.
Ferdinando further stated, “Most importantly, we have been able to secure sufficient raw material stocks for at least six to nine months and we are working to expand our stocks where possible to ensure there are no disruptions due to raw material shortages.”
In addition to bolstering the financial stability of the company, the capital we raised in our IPO, approximately Rs.1.5 billion, has helped significantly reduce our borrowing costs, thereby reducing net finance costs, which is providing us with significant relief at present.
Comments are closed.