Global crisis, spiralling production cost eat up Nialco Alloys’ profit

The global market uncertainty posed a serious blow to Nialco Alloys Limited, as the high-grade bronze and brass ingot maker witnessed a 60 per cent fall in profit in the fiscal year 2021-22.

The cent per cent export-oriented company exported Tk 20.58 crore worth of goods in FY22, which was around 33 per cent lower than the export receipts worth Tk 60.28 crore in the previous year.

Due to this steep decline in exports, the listed company’s net profit went down by 59 per cent year-on-year in the fiscal year 2021-22.

The extremely sluggish demand for goods in the European countries, coupled with the spiraling production cost, led to a significant fall in profit, the company stated in its recently published financial report for FY22.

The Russia-Ukraine war posed an uncertainty in the global market because of economic slowdowns in almost all countries amid surging inflation, it added.

“These crises exacerbated the global business, leading to a demand fall, consequently shrinking our profit as well.”

“With the mighty dollar price the production costs also went up manifold that’s why we adopted a go-slow move to avoid further blows, another reason playing a role to lower the earnings,” according to the company’s latest annual financial report.

Tariqul Islam Chisty, company secretary of Nialco Alloys Limited told The Business Post, “The global economic crisis hurt our business on a large scale last year, but we are hoping to recover it in the current fiscal year.”

“Because of being a cent per cent export-oriented company, our negative output was bigger than other peers because of the global supply chain disruption,” he added.

The company listed on the SME platform of the Chittagong Stock Exchange (CSE), held its last annual general meeting on December 22, 2022.

The company has a paid-up capital of Tk 28.50 crore.

Any company with a paid-up capital of less than Tk 30 crore is considered a small-cap one and that’s why it is pushed on the SME board of the bourses in Bangladesh.

The SME Platform was launched in September 2021 comprising such small-cap listed companies.

Companies listed on this platform do not have the obligation to disclose quarterly margins like those listed on the main market.

In October 2021, Nialco Alloys announced to invest of more than Tk 2 crore in the two plants – an aluminium manufacturing plant and an aluminium zink recycling plant.

According to the company’s announcement, the capital to implement these projects came from bank credits.

The company’s earnings per share (EPS) stood at Tk 0.51 for the fiscal year 2021-22 against Tk 1.72 for the previous fiscal year.

The Bangladesh Securities and Exchange Commission (BSEC) approved the company to raise Tk 7.5 crore through the capital market.

The company’s net asset value per share stood at Tk 12.20 without revaluation reserve as on June 2022.

The company’s shares were traded at Tk 55.20 per share on Tuesday.

Sponsors and directors jointly hold a 73.14% stake in the company, while institutional investors own 26.31% and the general public 0.55%.