Textile companies watch their profits fall

Listed textile and clothing manufacturers are still suffering from declining profits, impacted by declining clothing sales in overseas markets amid the ongoing coronavirus pandemic.

However, this industry scenario has one exception: the spinners. Yarn makers listed on the Dhaka Stock Exchange (DSE) recorded higher profits in the July-March period of the current year compared to a year ago thanks to higher prices some thread.

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Data from the DSE showed that of the 26 listed RMG, textile and spinning companies, 16 recorded declining profits. About ten manufacturers have reported declining profits.

The pandemic has had a negative impact on the textile and RMG sector, causing their profits to plummet, said Robiul Islam, secretary of the Paramount Textile company.

Due to the pandemic, global consumption has declined, so exports have been affected, he said.

Between July and March of the current fiscal year, Bangladesh earned $ 23.48 billion from garment shipments, down 2.55 percent from the corresponding period of the previous fiscal year, according to data from the Export Promotion Office.

Only companies with a high reputation abroad were able to attract a few export orders, Islam said, adding that his company was able to generate profit due to the high quality of its products and its reputation. .

Paramount Textile posted higher profits during the period than any other company, whose profits fell more than 5 percent to Tk 52 crore from the same period a year earlier.

The RMG and textile sector were also affected by the rise in the price of yarn, Islam added.

As textiles and RMG struggled, the spinners took advantage of rising yarn prices which turned out to be a major contributor to their higher profits.

Of the six listed spinners, four had higher profits and two were able to make a profit by suffering losses before.

Malek Spinning recorded the strongest profit growth among the 26 listed textile companies. Its profit has grown more than eight times year on year to Tk 39 crore in the first nine months of the current fiscal year.

“Our profits increased because during the period our sales were higher along with the prevalence of a higher yarn price,” said Syed Saiful Haque, secretary of Malek Spinning Mills.

“The prices of the year were always good, so we generate better business,” he said.

Cotton was traded between $ 0.60 and $ 0.85 per kg on average during the June-December period of last year, which was later at between $ 0.95 and $ 1.7 in March, according to the data from Bangladesh Textiles Mills Association (BTMA).

Bangladesh depends mainly on China and India for cotton and other raw materials, according to a market insider.

But the Chinese market remained closed during the pandemic, and then the price of cotton rose. Then India raised the price alongside local Bangladeshi spinners.

The spinners attributed the rise in cotton prices to the growing demand for this product in the world and its tightening of supply, as well as to the rise in the costs of other related logistics following the emergence of the pandemic. .

Due to the pandemic, the price of cotton has increased in the world market, which has increased the prices of yarn. This ultimately had an impact on the local yarn market, said Mir Ariful Islam, head of research at Prime Finance Asset Management Company.

Thus, companies that held cotton stocks made huge profits during the period, he said.

Thus, the spinning mills generated higher profits this year, Islam added.

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