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Apex Footwear reported impressive financial progress in the first half of the fiscal year 2022-23 with a revenue surge of 41.5 per cent year-on-year, and a net profit jump of 41.0 per cent.
The maker and seller of footwear and accessories registered Tk 6.7 crore in net profit in H1 of the current fiscal, while its revenue stood at Tk 801 crore.
The growth was primarily driven by the export receipts, which accounted for 51.7 per cent of the company’s consolidated revenue in July-December of FY23, as per a report prepared by EBL Securities.
Such a stellar export growth was possible due mainly to the initiation of its footwear export to GU, a shoe brand of Uniqlo-Japan, and the higher conversion rate of the US dollar against the domestic currency, the report read.
On the domestic front, alongside its own brands, the company has been outsourcing and selling footwear and accessories of different foreign brands in its local outlets which also helped progress its business.
The maker of footwear products, according to the EBL Securities report, was currently mulling expanding its production capacity, and in line with the move it decided to purchase 5 acres of industrial land in the Sirajganj Economic Zone for capacity expansion.
Once the expansion plan is implemented, it would increase the firm’s consolidated revenue and profit in the years to come.
Apex Footwear is one of three Bangladeshi companies certified by the Leather Working Group, the world’s most recognised certification for responsible leather sourcing.
This recognition might allow the company to have an opportunity in attracting foreign buyers and charging a comparatively higher price for its products in the global market.
According to the EBL Securities report, while the company has immense potential to achieve higher revenue and profit growth in non-leather footwear export, there are also concerns regarding the company’s debt-to-equity ratio, which stands at 5.26 times as on H1 of FY23.
Additionally, its profitability margins are lower compared to its listed peers, due mainly to higher operating expenses and interest expenses.
Furthermore, its revenue and profit growth from exports to European countries might be adversely affected in H2 of the current fiscal due to the decrease in purchasing power capacity of consumers caused by high inflation across European nations.
Despite these challenges, the company is expected to continue its export growth momentum in the coming years because of the policy supports awarded by the government, the EBL Securities report said.
The government planned to raise the leather export earnings to $10-12 billion by 2030, and to realise this goal, the government has been providing a 15 per cent cash incentive to the leather exporters.
Moreover, its growth momentum in the local market is also expected to continue, as it started manufacturing and marketing export-quality shoes at reasonable prices for rural customers.
