Monday, December 4, 2023

JAT Holdings Posts Highest-Ever Revenue for Q1 2023 Amidst Economic Crisis

  • Revenue growth by 39% and gross profit growth by 37%
  • Highest ever PAT for the 1st quarter
  • Secures over 8 months of raw material as inventory for uninterrupted production  
  • Commenced manufacturing operations in Bangladesh under fully-owned subsidiary, Asia Coatings (Pvt) Ltd
  • Financial relief schemes provided to safeguard employees

Guided by its highly-experienced and skilled corporate management team, JAT Holdings PLC 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.

Financial Performance Overview

Total Revenue for Q1 grew by a very handsome 39% to LKR 1.935 billion, against LKR 1.396 billion in the corresponding quarter in the prior year, while Gross Profit in absolute terms rose by 37% to LKR 525.6 million, against LKR 382.6 million in Q1 of FY 2021/22. Gross Profit Margins were maintained unchanged at 27%, 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.

Meanwhile, operating profit grew by 50% during the period under review to LKR 280.2 million, up from LKR 186.75 million in the corresponding period. However, Operating Profit Margin growth was subdued, but still recorded an expansion to 14%, up from 13%. 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%, demonstrating a sustained momentum of recovery, to LKR 198.8 million, compared with 168.9 million earlier, although Margins contracted slightly, from 12% in the corresponding period, to 10% 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 organization, 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 LKR 2.2 billion, amidst a oversubscribed issue, through the sale of 82,904,846 ordinary shares at a price of LKR 27.00 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%, as a result of reorganization 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% to LKR 1.576 billion in Q1 of FY 2022/23, up from LKR 989.3 million in the corresponding period. This was driven by increased sales, coupled with the effects of input price inflation.

Sectoral Performance

All of the business sectors of JAT Holdings PLC recorded healthy to phenomenal gains in terms of revenue growth during the period under review. Its largest business sector, Wood Coatings, witnessed a 21% expansion in revenue, rising to LKR 796 million this quarter, up from LKR 658 million in the corresponding period.

WHITE by JAT saw the largest growth in revenues, driven by growth in the emulsion sector, coupled with increased market share. Accordingly, the sector posted a phenomenal 206% revenue growth in the quarter under review, soaring to LKR 203.1 million from just LKR 66.5 million in the corresponding period. Similarly, WHITE by JAT’s online sales too posted a remarkable revenue expansion of 187%. The Group’s Brushes business also recorded revenue growth of 27% to LKR 56.25 million this quarter, up from LKR 44.3 million in the corresponding period.   

Notably too, the volume of sales accruing to the Group’s Paints business rose by a remarkable 49%.

Progress on IPO Objectives

One year since the Issue, JAT Holdings PLC has fulfilled its promises to investors with regard to its IPO Objectives. 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.”

About JAT Holdings

Since its founding in 1993, JAT Holdings has established itself as a market leader in Sri Lanka for wood coatings and as one of the country’s most promising conglomerates. This is further attested to by accolades such as being ranked amongst Sri Lanka’s ‘Top 100 Most Respected Companies’ by LMD for four years consecutively and also ranking among the ‘Top 20 Conglomerate Brands’ by Brand Finance. Up until last year’s IPO, JAT Holdings was also the only privately held company in Sri Lanka to receive the coveted Moody’s ICRA ‘A+ Stable’ rating for 6 years consecutively.

Photo Caption: Aelian Gunawardene – Founder/Managing Director – JAT Holdings PLC and Nishal Ferdinando – CEO – JAT Holdings PLC

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