• Topline increases by 14%
• Foreign revenue up by 87%
• Bangladesh Alkyd Manufacturing Plant commences operations
• Sri Lanka Binder Manufacturing Plant near completion
• Expansion into Australia through the furnishing sector
Sri Lanka’s market leader in wood coatings and paint brushes, and emerging regional conglomerate, JAT Holdings PLC recently released its financials for Q3 of FY 2023/24, reflecting a resilient performance amidst adverse market conditions. With its operations in Bangladesh seeing continued expansion, including the opening of its manufacturing facility in 2023, and its alkyd resin plant in 2024, supported by cutting-edge R&D and value engineering in Sri Lanka, JAT has established itself as a leader in wood coatings in the region. Accordingly, during Q3, JAT Holdings PLC recorded its highest-ever export turnover at Rs. 2,822 million, an 87% leap from Rs. 1,511 million recorded during the comparable period in FY 2022/23, while export sales margins too improved. Revenues were up by 14% to Rs. 7,887 million from Rs. 6,945 million in the corresponding period in the year prior. JAT’s Alkyd Resin Plant in Bangladesh, now fully operational, is expected to further boost the Bangladeshi operation’s bottom line into FY 2024/25.
Local paint sales too rose by 14% in the period under review, against the comparable period in the year prior. However, project revenues noted a dip owing to a slowdown in the construction sector. While the macro economy is turning around, and most import restrictions have been lifted, disposable incomes continue to decline as a result of high taxes and inflation, presenting both challenges and opportunities. However, several projects undertaken by JAT Holdings PLC are nearing completion and these may likely provide a healthy boost to local revenues in Q4 of FY 2023/24. As a result of these ongoing challenges, local revenues noted a contraction of 7% to Rs. 5,066 million, from Rs. 5,433 million in the corresponding period in the year prior.
Meanwhile, owing to the challenging business environment, contracting Sri Lankan economy, and foresighted strategic manoeuvring by JAT Holdings PLC, the Group’s gross profits noted a marginal contraction of 5% to Rs. 2,295 million, from Rs. 2,409 million in the comparable period of FY 2022/23. Driven by an inflationary environment and subdued demand, local, operating profit also noted a contraction of 38% to Rs. 871 million, from Rs. 1,401 million in the comparable period of the year prior. Furthermore, as a result of strategic consolidation, adverse market conditions, increased advertising costs to further consolidate brand equity, and significant investment into transnational operations and customer loyalty, sustainability, and community development programmes, profit before tax (PBT) also witnessed a contraction of 36% to Rs. 755 million, from Rs. 1,188 million in Q3 of the previous year. Accordingly, profit after tax (PAT) too was curtailed, recording a contraction of 42% to Rs. 576 million, from Rs. 987 million in the corresponding period of the year prior, hampered further by a higher tax regime than the previous quarter.
Discussing the Group’s financial performance, CEO, Nishal Ferdinando said, “Understanding the challenges consumers face, we have invested heavily into promotional efforts, and our social and sustainability programmes such as Pintharu Abhiman, which is conducted in partnership with NAITA, and with the support of Sirasa for wider coverage. These efforts, combined with the challenging business environment, have impacted our bottom line. However, we believe that they will empower us to sustain and grow market share as conditions become more favourable. Furthermore, we have invested heavily in expansion into foreign markets, particularly in Bangladesh, where we have made quantum leaps forward with our manufacturing plants for goods and raw materials, making for enhanced vertical integration, and thus efficiency. In addition to this, we have been focused on our operations in Africa via JAT Paints Africa Ltd and improved forward vertical integration through showrooms in the Maldives, Bangladesh and Australia. Our focus has also been heavily on digitalisation for more oversight and control over our value chains and increased administrative, manufacturing, and technical efficiency. We believe these measures will give us an edge as business conditions improve.”
Managing Director of JAT Holdings PLC, Aelian Gunawardene added, “In coping with and responding to the dynamic and challenging business conditions, the board has directed the company towards a focus on export expansion, together with increased efficiency, automation and improved cost management. Our goal is to maintain positive cashflows and liquidity, whilst consolidating our financial position, as this will provide us with a significant advantage when conditions improve. In the meantime, we have taken strong measures to maintain the loyalty of our customer base, while also continuing to provide various financial and other relief schemes to our people to help them cope with the inflationary environment and the rising cost of living. Thus, we believe we are now poised to take full advantage of the emerging economic recovery and continue to deliver exceptional value to our customers and stakeholders.”