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Economic crisis sends 43 listed firms, mutual funds into losses
AHSAN HABIB
At least 43 listed companies and mutual funds fell to losses in July to December of the ongoing financial year after reporting profits in the identical half a year ago.
A massive depreciation of the local currency against the American greenback, higher prices of raw materials and fuel, and lower sales amid escalated inflationary pressure have been blamed by the companies for the loss.
Some 218 companies listed on the Dhaka Stock Exchange (DSE) have published their financial report for the first half of 2022-23. Of them, 43 firms reported fresh losses, according to the data compiled by Sandhani Asset Management.
Among the companies, 18 are mutual funds, 10 firms are from engineering sector, six are from garment industries, and three are from the power sector. There are also food makers and tanneries.
Owing to the current economic volatility, big names such as ACI, GPH Ispat, Runner Automobiles, and BSRM Ltd incurred losses in July-December.
For example, GPH Ispat, a steel maker, posted Tk 84.79 crore loss in the first half of FY23, way down from a profit of Tk 94.93 crore in the July-December of FY22.
BSRM Ltd, the country’s largest steel manufacturer, reported a loss of Tk 110.18 crore for July-December, reversing from a profit of Tk 242.15 crore in the first half of FY22.
Other companies that also suffered losses in the two quarters compared to a year ago include Legacy Footwear, Apex Tannery, Safko Spinning Mills, Prime Textile Spinning Mills, Rahim Textile Mills, and Golden Harvest Agro Industries.
Twenty-two companies remained in the red.
“This is a combined effect of Covid-19 and the global commodity crisis, the Russia-Ukraine war, the depreciation of the local currency, higher prices of raw materials and the fall in demand,” said Anis A Khan, an executive member of the Bangladesh Association of Publicly Listed Companies.
No sooner had the severe impacts of the coronavirus pandemic gone away than the global economy was handed a fresh blow after the war broke out in February last year.
The conflict hit the already battered global supply chains. As a result, a global energy crisis surfaced and the global commodity market turned volatile.
Bangladesh’s economy was not spared as an unprecedented import cost in the last fiscal year meant the foreign exchange reserve came under pressure. The strain has continued in the current financial year as well.
So, the foreign exchange reserves dropped 19 per cent to $33.83 billion in the first half of FY23, Bangladesh Bank data showed.
As a result, companies have been experiencing persisting difficulty in importing capital machinery and raw materials. On top of that, the local currency depreciated to a large extent so raw material prices also went up, said Khan, also a former managing director of Mutual Trust Bank.
The taka weakened by about 14.5 per cent in July-December of FY23 because of US dollar shortages. Since the war began, the currency has lost its value by about 25 per cent, making imports expensive.
As the war-induced crisis drags on, most of the companies felt the pinch in recent quarters. In fact, around 70 per cent of the listed companies in Bangladesh either suffered losses or witnessed lower profits in the July to December period.
“Some of them saw fresh losses while some logged lower profits. This is a cascading effect,” Khan said.