The Jakarta Post
Publicly listed textile company PT Sri Rejeki Isman (Sritex) saw its profit and revenue stagnate in the first quarter despite the health crisis, propped up by the sales of masks and protective suits.
Sritex managed to book a slight increase in net profit to US$28.2 million in the first three months of the year, from $28 million in the same period last year. Its revenue stagnated at $316.6 million from January to March, a very small dive from $316.8 million in last year’s first quarter.
“We tried to shift our products toward something that corresponds with the pandemic. We managed to produce masks fairly quickly,” Sritex president director Iwan Setiawan Lukminto said during a livestreamed public expose on Tuesday.
The company began producing protective suits and masks in January. By the end of April, the company had produced over 45 million masks.
It has been forced to postpone several export shipments due to pandemic-induced disruptions, though it has been compensated by an increase in local sales.
In the first quarter, the company’s total export was down by $2 million to $189.1 million compared to the same period last year. However, the decrease was almost made up by a $1.8 million year-on-year (yoy) increase in local sales to $127.5 million in this year’s first quarter.
The total cost, however, increased 2 percent yoy to $257.6 million in this year’s first quarter. The company attributed this to additional costs incurred in implementing health protocols to contain the virus in its factories, which includes distributing masks to employees and sanitizing the facilities.
During an annual shareholders meeting on Tuesday, shareholders of Sritex agreed on a dividend payout of Rp 1 per share, with the total dividends disbursed by the company amounting to Rp 20.45 billion ($1.41 million).
The dividends accounted for roughly 1.6 percent of the company’s 2019 net profit of US$87.65 million. This is lower than the previous year’s dividend payout ratio of 5 percent. In 2018, the company booked a net profit of $84.56 million, $4.24 million of which was distributed in dividends of Rp 3 per share.
“The reason behind the decision to give out a smaller cash dividend is because all parties understand the importance of maintaining the company’s liquidity and equity [value],” Sritex corporate secretary Welly Salam explained during the public expose.
Earlier this year, international credit rating agency Moody’s Investors Service downgraded the rating of the company to negative from stable.
“The negative outlook reflects our expectation that diminished consumer spending on apparel and footwear globally as a result of the coronavirus outbreak will reduce Sritex’s earnings and increase its working capital needs through 2020,” Moody’s analyst Stephanie Cheong said in a written statement published on April 20.
“Nevertheless, the rating affirmations reflect our expectation that the company will have adequate liquidity to absorb negative operating cash flow over the next two to three quarters.”
The company’s cash balance stood at $159.5 million as of March 31, according to a Sritex financial report. In comparison, its cash balance stood at $168.3 million by the end of 2019.
Despite the decline, it is still in a good position to cover its upcoming $116 million of maturing debts this year, which includes $30 million and $10 million worth of medium-term notes due in November and December, according to Moody’s report.
“The company’s loan ratio has more long-term loans than short-term ones,” Welly said, noting that the nearest matured loans were syndicated loans due in 2022, with an extension possible.
Sritex shares, traded on the Indonesia Stock Exchange under the code SRIL, closed at Rp 197 per share on Wednesday, up 1 percent against the previous trading day. The benchmark Jakarta Composite Index (JCI) was up 1.79 percent on the same day.
Throughout the year, Sritex stocks have lost 24.2 percent of their value, while the JCI lost 19.42 percent.