GPH Ispat sinks into losses as costly dollar beats earnings

Steel maker GPH Ispat reported a massive loss in the July-December period of the current fiscal year as the company’s import costs swelled up enormously due mainly to the depleted value of the domestic currency against the US dollar during the time.

Besides, the publicly traded company’s export receipts were also exhausted in the first half of the fiscal year 2022-23, another reason to vanish its profits.

The local steel maker, however, registered a stellar surge of 41.7 per cent in revenues in H1 of FY23, but its earnings were wiped out due to the exorbitant costs to source raw materials caused by the currency volatility.

The firm’s revenues surged to Tk 2823 crore in July-December of FY23 from Tk 1992 crore in the same period of FY22.

Foreign exchange transaction expenses, the company said, jumped by 500 per cent year-on-year in H1 of FY23, biting off its entire earnings.

As a result, instead of making profits, the company incurred a heavy loss in July-December this fiscal.

The company posted a net loss of Tk 84.02 crore in the first six months of FY23 compared to a profit of Tk 95.88 crore in the same period of FY22.

The steel maker’s foreign exchange transaction costs stood at Tk 147.16 crore in H1 of FY23, which was only Tk 2.71 crore in the same period last year.

The company had registered Tk 181.92 crore worth of exports in July-December of FY22.

Although the listed company did not reveal the figure of export earnings in the first half of the current fiscal year it said the amount was very negligible so far this year.

M Ashrafuzzaman, the chief financial officer of GPH Ispat told The Business Post, “Despite a stellar surge in revenues, the loss was computed in H1 this fiscal due mainly to the extravagant rise in import costs.”

“Basically from July to December last year, it was not possible to stay afloat because the exchange rate of the dollar against the taka had been very hostile to the country’s businesses,” he added.

The steel maker, according to Ashrafuzzaman, markets as much as 90 per cent of its products in the domestic market.

It used to export billets (steel’s raw material) but this was no longer in production, resulting in a fall in export receipts in the first half of the current fiscal.

The company in October 2020 started exporting billets to China, which was the first of that kind in Bangladesh’s history. In July-December of FY23, the company’s loss per share stood at Tk 1.84 against earnings per share of Tk 2.17 for the same period last fiscal year.

Incorporated in 2006, GPH Ispat has an annual production capacity of 84,000 tonnes of MS Billet and 120,000 tonnes of MS Rod with a diameter range between 8 mm and 40 mm,

The company has embarked on a new journey with cutting-edge innovation in the history of steel manufacturing and has proudly introduced Asia’s first quantum electric arc furnace and Winlink technology, according to the company info.

Moreover, the company in June 2021 announced commercial production in its newly expanded plant.