Listed companies sprint to pre-Covid profit level
Combined profit of the majority of the listed companies surpassed the pre-Covid level in October-December quarter, pointing to a fast rebound in business and economic activities.
An analysis of 185 listed companies representing pharmaceuticals, fuel and power, textile and apparel, IT and telecom, steel, cement, ceramic, automotive, leather, food and consumer goods showed that the combined profits rose 26 per cent year-on-year to Tk 3,758 crore in the last quarter of 2020.
The cumulative profit was Tk 3,252 crore in the July-September period because of a pickup in business and consumer confidence, thanks to the reopening of the economy following a strict nationwide shutdown in April and May.
Average quarterly profit of the listed companies was Tk 2,882 crore in the five quarters to March.
It dropped 34 per cent year-on-year to Tk 1,655 crore in the April to June period as demand hit rock bottom after the health crisis wiped out millions of jobs and created an additional 20 per cent new poor in Bangladesh.
"The economy depends on how companies fare. So, their profits do indicate the economy's trend," said AB Mirza Azizul Islam, a former chairman of the Bangladesh Securities and Exchange Commission.
"The rebound in profit is a positive development for the economy."
The analyst said the listed companies were a significant part of an economy, so the data reflects that the economy is making a turnaround. The agriculture sector is also doing well, he said.
The Daily Star took into account 185 out of 331 listed companies as many companies are yet to publish the financial reports for the October to December period. Newly listed companies were also excluded.
Of the companies, the performance of 151 firms improved in the last quarter compared to the pre-pandemic period.
Islam gave credit to the government's timely initiative to support the economy as it has had contributed to lifting domestic demand.
The government rolled out 21 stimulus packages involving more than Tk 121,000 crore since March, when the government announced the maiden cases of coronavirus infections and subsequently a nationwide lockdown for two months to tame the virus.
The packages have been provided in the form of low-cost loans to micro, small, medium and large industries and services, food security, social protection and special allowances as the pandemic-induced shutdown paralysed the economy.
Azam J Chowdhury, president of the Bangladesh Association of Publicly Listed Companies (BAPLC), said pharmaceutical, energy and commodity sectors were not impacted by the pandemic.
Profits for the listed companies fell around 30 per cent on an average during the pandemic.
The profits of the listed drug makers dropped 24 per cent to Tk 510 crore in the April-June period. It sprinted to Tk 846 crore in the last quarter of 2020, way higher than the pre-Covid level.
The fuel and power sector made a profit of Tk 933 crore in the last quarter, up from Tk 702 crore in April-June.
Chowdhury's company Mobil Jamuna's earnings rose compared to the pre-pandemic level.
Not all listed companies are in the same position.
"Some are going down and they have no growth and no strategic plans," said Chowdhury.
Among all the major sectors, the textile and engineering sectors were the hardest hit as demand collapsed. The two sectors witnessed losses in the April-June period.
The rest of the sectors made profit despite the pandemic although the profit was not as high as it was in the past.
The textile sector incurred a loss of Tk 223 crore in the April-June quarter. It logged a profit of Tk 93 crore in the last quarter of 2020, way lower than the pre-Covid level.
The engineering sector posted a loss of Tk 48 crore in April-June. Its profit stood at Tk 358 crore in the October to December period.
Some 95 companies incurred losses in April to June. The number of loss-making companies came down to 32 in the fourth quarter of last year, data showed.
"As business was shut completely for two months in the April-June quarter, the profit collapsed in the period," said Shahidul Islam, chief executive officer of VIPB Asset Management Company, which manages mutual funds and institutional funds worth around Tk 650 crore.
The profit went up in the last quarter as demand rose, Islam said.
"There are some expenditures that you can't defer even during the shutdown of an economy."
"As the garment industry is mostly linked with the international market and our export destinations witnessed repeated lockdowns, the impact on the sector was devastating," said Anwar-ul Alam Chowdhury, a former president of the Bangladesh Garment Manufacturers and Exporters Association.
"When other sectors bounced back, the second wave barred the garment industry from making a comeback as we rely on exports," he said.
International buyers had placed orders but they either cancelled them or put them on hold as the pandemic raged, said the chairman of Evince Textiles.
"Until the demand in the international market picks up, the performance of the garment industry will not improve much."
In July-December, earnings from apparel shipment, which accounts for more than 80 per cent of national exports, declined 2.99 per cent to $15.54 billion, data from the Export Promotion Bureau showed.
"We also found that the profit of companies was severely impacted in April to June," said Selim Raihan, executive director of the South Asian Network on Economic Modeling (Sanem).
"The economy is recovering but the process is slow."
Arif Khan, CEO and managing director of IDLC Finance, said overall activities accelerated.
The loan recovery rate of the non-bank financial institution recovered to 90 per cent from 35 per cent in April.
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