Costly dollar, power crisis cause grief for GPH Ispat

Steel maker GPH Ispat Limited reported net losses in the first quarter (July-September) of the current fiscal year, thanks to a strong dollar and electricity supply deficit, hurting its production alarmingly.

This was the first time the publicly traded company witnessed a quarterly loss in the last five years.

The country’s leading steel maker posted Tk 79.4 crore in net loss in the July-September period of the fiscal year 2022-23 versus a net profit of Tk 45 crore in the corresponding period last fiscal year.

Due to the profit fall, the earnings per share of the listed company also dropped significantly, according to Dhaka Stock Exchange (DSE) data.

The company blamed the costly dollar as well as the reduction in production caused by the power crisis for its massive financial distress in the first quarter of the current fiscal.

The steel maker’s spending, according to its Q1 financial report, however, went up by 140 times year-on-year due to the high appreciation of the US dollar against the domestic currency.

The company’s expenditures stood at Tk 127 crore in Q1 of FY23 which was Tk 0.89 crore in the same period of the previous year.

The company pocketed TK 2.82 crore in profit on foreign currency transactions in the first quarter of FY21 owing to the appreciation of the domestic currency which was TK 2.58 crore in the same quarter of FY20.

Abu Bakar Siddique, company secretary of GPH Ispat Limited told The Business Post that their single-quarter costs reached the highest level in Q1 of the current fiscal year due to the costly prices of the dollar, leading to a staggering rise in raw materials imports.

Moreover, the company’s production was hampered on a large scale due to the power supply deficit in the factories, he added.

Meanwhile, the company’s other expenses were going up. So, the profit consequently fell owing to all these reasons, Abu Bakar continued.

The global dollar market was still very unstable. So, the import costs multiplied since the start of the Russia-Ukraine war. Besides this, the country’s steel makers are heavily import-dependent for sourcing raw materials, Abu Bakar explained the things to let understand their recent business state.

The publicly traded steel maker’s business expansion made last year was yet to bring in desired returns due to the recent global economic slowdown, according to its financial report.

As part of the business expansion plan, GPH Ispat Limited launched its Chattogram-based Kumira plant in June 2021 with a MS billet production capacity of 8.4 lakh tonnes and a MS rod production capacity of 6.4 lakh tonnes annually.

The company’s earnings per share (EPS) in the first quarter of FY23 turned negative due to its earnings disaster. 

It posted a per-share loss of Tk 1.82 in the July-September period of FY23 against earnings per share of Tk 1.03 in the same period of the last fiscal.

Its net asset value (NAV) per share stood at Tk 26.98 till September 2022 which was Tk 28.79 as on June 2022.

The steel manufacturer witnessed an 18 per cent decline in net profit in the fiscal year 2021-22 due to a staggering increase in raw material prices.

The company recommended 5.5 per cent cash and 5.5 per cent stock dividends to its shareholders for the last fiscal year.