With the company shifting production away from China, knit fabric manufacturer Teejay Lanka is seeing a surge in demand for its products. Bloomsberg reports, the company, which manufactures about 45 tons (of fabric a day in Sri Lanka, plans to expand operations by next month. It predicts, current strong demand will continue until July this year. However, slowdown in the US economy may impact retail sales, says Hasitha Premaratne, Director, Teejay Sri Lanka.

Inflation in Sri Lanka accelerated to its highest levels of 39.1 per cent in May this year as citizens suffered from food, medicine and fuel shortages besides enduring daily power outages of as much as 13 hours. Teejay is coping by using generators during the electricity cuts to ensure uninterrupted operations. The company increased its net income by 8.6 per cent in the Q4FY’22 The depreciation of the local currency in Sri Lanka will currently offset the rupee cost increase. This will help the nation keep overheads intact at the dollar level.

Yarn prices in the country will gradually stabilize by the beginning of FY24 while increased towards high margin synthetic fabric and enhanced market share will help Teejaky Lanka to cushion negative impact arising out of rising cost pressures, says Hiruni Perera, Analyst, First Capital.

Brokerage First Capital downgraded earnings for the financial year ending March 2023 to Rs 3.6 billion ($10 million), and for the year after to Rs 5.7 billion, considering higher commodity prices and the resultant impact on margins.