Only four listed textile companies witnessed profit growth in the July, 2019-March, 2020 period due mainly to a decline in product prices, increased production cost, and global coronavirus outbreak, sector people said.
Of the 42 listed textile companies that have declared financial results recently, four were able to post profit rise while 10 declared losses and the rest 28 witnessed a sharp fall in profits in the nine months compared with that in the corresponding period in the previous year, according to Dhaka Stock Exchange data.
Fourteen out of the 56 listed textile companies are yet to declare financial results for the third quarter. Seven of the 15 companies have kept their factory shut while five others made significant profit decline during the July-December period last year and there is a slim possibility that the companies would make profits in the July 2019- March 2020 period, sector people said.
Textile company officials said that the profits decreased due mainly to a decrease in sale prices and collections from turnover, and an increase in production expenses in the period.
The cost of utility bills including gas and electricity has also been on the rise that raised production cost of the companies, adding that a shortage of gas supply to the factories hindered production, the officials said.
Factory owners claimed that the new wage structure raised expenses of their companies as the latest RMG wage board set the minimum wage at Tk 8,000 and implemented the wage structure in December, 2018.
Despite all the investments made in workplace safety, compliance, implementation of new wage structure and green industrialisation, the foreign buyers kept the unit price significantly low, they said.
Lending rates to businesses in Bangladesh were also high during the period in terms of international standards that subsequently increased cost, they said.
The government, however, implemented 9-per cent lending rate from April 1 this year.
The exchange rate of the taka against the dollar has remained high for a long time while the competing countries have devalued their currencies to gain share on the international market.
Bangladesh Textile Mills Association president Mohammad Ali Khokon, also the managing director of Maksons Spinning Mills Limited, told New Age that the cost for raw materials significantly rose while the sales plunged during the period.
He, however, expected that the situation would improve from September this year.
Besides, the COVID-19 pandemic, which began in China in December last year, spread to the other countries including Bangladesh, and disrupted the global supply chain.
Experts and exporters said that the impact of lockdowns in China, the United States and countries in Europe from January weighed heavily on the country’s export data.
Export earnings from readymade garments in July-March of FY20 fell by 7.12 per cent to $24.10 billion from $25.95 billion in the same period of FY19.
Many RMG factories have been closed down and many workers have lost their jobs due to the current business situation in the sector.
The companies which saw profit growth during July, 2019–March, 2020 are Kattali Textile, Matin Spinning Mills, ML Dyeing and Paramount Textiles.
On the other hand, Metro Spinning, Nurani Dyeing, RN Spinning, Safko Spinning Mills, Toshrifa Industries, Zaheen Spinning, Alltex Industries, Dulamia Cotton, MozaffarHossain Spinning Mills and Zaheen Textile witnessed losses during the July, 2019-March, 2020 period compared with the same period in the previous year.
The rest 27 companies including Rahim Textile Mills, Shasha Denims, Pacific Denims, Desh Garments, Evince Textiles and Malek Spinning Mills faced a significant profit fall during the period.
Shares of 15 listed textile companies were trading under the ‘Z’ category which groups low-profile and junk shares on the stock exchange due to their poor business performance.
Out of 56 listed textile companies, 22 were trading below the face value of Tk 10 a share.
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