The businesses posted impressive double to triple-digit growth in profits over July-December 2022. On their way to recovery from the pandemic dents, businesses in 2022 were caught in even bigger problems due to the Russia-Ukraine war, which sparked massive inflation, hike in energy and all other costs, currency depreciation and a tightening money market.
Amid this turbulent situation, while the majority of publicly listed firms reported profit slump, more than 40% managed to stay afloat in terms of profitability retention over the July-December period.
Nearly 30% of the companies even posted impressive double to triple-digit growths in their profits during the tough six months, as per an EBL Securities report.
Amid high inflation, companies that did not face a significant drop in demand for their products and services – and were not much dependent on energy consumption or imports and bank loans – fared better, and vice versa, said Tareq Ibrahim, CEO of CWT Asset Management.
The services sector, real estate, IT and Internet providers, cash-rich firms – such as the state-owned oil distributors, pharmaceuticals, consumer staples and fast-moving consumer goods are the sectors he is interested in as an investment manager.
On the other hand, consumer discretionary, construction material, and automobiles had a tough time.
Also smart, efficient companies managed the crisis much better than their competitors did, added Tareq Ibrahim.
For example, MJL Bangladesh, the market leader in lubricants, emerged as the top LPG player in January.
"Like all others, our businesses also faced ongoing challenges. But each of our segments – lubricant, LPG and shipping – showed tremendous strength to overcome as each of our teams worked hard and smart to have the right strategy and plans to execute, said Azam J Chowdhury, MD of MJL Bangladesh.
Its LPG business – Omera – was suffering at the beginning of the macroeconomic crisis due to the adverse dollar rates, and tight price fixing by the regulator. Focusing on industrial solutions, and overall competitiveness it rebounded strongly.
Square Pharmaceuticals, the top drug maker, was fully prepared for the crisis before it unfolded, according to its MD Tapan Chowdhury.
Full preparation, in financial, logistics, production capacity and marketing terms made the difference despite the issues like soaring costs of imported raw material due to the soaring dollar," he told TBS.
"We invested heavily for capacity expansion during covid and that is also paying off," he added.
The cash-rich company posted a double-digit profit growth, while many of its competitors including Renata's profit dropped.
Textiles, due to energy and power issues might see some profits wiped out, "but we will not let our customers, suppliers, shareholders down," he said.
Summit Alliance Port, the largest off-doc facility in the country, posted nearly double profits in the six months through December despite container handling dropping over the period.
Director and COO Captain Kamrul Islam Mazumder said it was a tough time for all. Export container handling by the off-doc operators dropped by 6-7% YoY in the second half of 2022, while imports dropped by around 20%. Empty container handling increased by 22-24% on the other hand.
"Fuel cost hike, inflation and wage pressure all hurt profitability and we had to work hard to negotiate prices to adjust the increased costs."
Most companies tried to stick to their inevitable expenses and minimise the less-priority expenses.
Apex Footwear struggling with the pandemic stock lot posted a 42% jump both in half-yearly revenue and profits. Its Deputy Managing Director and CFO Dilip Kajuri said during the consumers' hard time his company offered discounts for higher local market revenue, while the soaring dollar helped its profit from export markets grow by 16.02% year on year.
Another listed footwear manufacturer Fortune Shoes Limited's profit dropped 40% YoY in the first half of the fiscal year.
Bashundhara Paper Mills, the largest tissue paper maker and a top paper manufacturer in the country, posted 68% profit growth in the July-December period and its General Manager Mazedul Islam said pre-crisis inventory building was a wise decision for them and it was competitive enough to sell more of its tissue papers and papers.
The bigger volume, cost control and strategic efforts to save on transportation costs helped it gain more efficiency to make better profits.
Compared to the previous two years, demand for paper was higher in the market in 2022 as educational institutions were open.
Biscuit market leader Olympic Industries sold more, registered higher revenues and smartly priced its products to balance between sales growth and profits that soared 46% YoY.
Olympic Executive Director Md Nazimuddin said increased raw material prices had a cost impact, but the scale and efficiency helped its profits grow. Thanks to the new investments for more capacity.
Better preparation and competitive edges help businesses grow and grab market shares during crises as the competitors feel shaky, said FH Ansarey, managing director of ACI's Agribusinesses division.
In the six months – proved to be hard for the automobile and engineering sectors, ACI Motors' two-wheeler business grew significantly and its brand Yamaha became the market leader in the 150cc segment. Also, its commercial vehicle brand Foton grew fast.
The market leader in the tractor segment further grew 30% in the six months, its power tiller business grew 24%.
Except for construction equipment, all its equipment sold more, according to Dr Ansarey.
Sales of seed, crop care products, fertiliser grew by 25%-32%, while artificial insemination business grew by 60%, he added.
Shrimp export leader Apex Foods, and its competitor Gemini Sea Food also posted higher profits over the six months when major export markets were not prepared to buy a lot and the companies adjusted their costs with the declined revenue for profit retention.
Top tableware exporter Shinepukur Ceramics, Tibbet, Sandalina and Jet branded personal care and laundry products' manufacturer Kohinoor Chemicals, Haircare market champion Marico, paints market leader Berger, housing company Eastern Housing, Ice cream maker Lovello, some of the textile and apparel makers posted higher profits.
IT firms like Genex Infosys, IT Consultants, E-generation, Aamra Networks, ADN Telecom, and state-owned Bangladesh Submarine Cable Company continued their sales and profits as they were not much impacted by the inflation or soaring dollar.
Midway News Team
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