Salvo Chemical’s profit falls 26% in H1 FY23

Salvo Chemical Industry Ltd, which produces sulfuric acid, sulfate, battery-grade water and glucose -- reported loss of 26 per cent in the first six months of FY23 compared to the same period last year due to the rising costs of raw materials.

The company informed investors in June 2021 that it planned to invest around Tk 70 crore in a new factory installation for their cornstarch unit, which would produce around 25,000 metric tons of product annually.

Later in May 2022, it announced that the cornstarch unit is ready to commence production.

The company’s net profit in the first six months (Jul-Dec’22) of FY23 was Tk 17.20 crore from this new unit compared to Tk 2.8 crore in the same period last year.

When contacted, the company told The Business Post on condition of anonymity that the overall revenue of the factory has increased since the new units went into production. But the profits did not reciprocate that rate as a result of the rise in the cost of raw materials on the global market.

“All the reasons for the decrease in income have already been mentioned on the DSE website”, he added.

The company posted a net profit after tax of Tk 6.43 crore in the first half of FY23, compared to the profit of Tk 8.77 crore in the same period last year.

The company’s total revenue comes mainly from the sale of five products. These products are sulfuric acid, battery-grade water, liquid glucose, and fiber, glucose, and germ. In the first six months of FY23, the income from the sales of those products were Tk 7.10 crore, Tk 0.83 crore, Tk 23.09 crore and Tk 31.23 crore respectively.

According to the company’s website, it manufactures agro-based organic chemicals such as maize starch powder both in food and textile grades, liquid glucose, maize germ, corn gluten meal, pulverized fibers and the non-organic chemical sulfuric acid.

Salvo Chemical’s earnings per share (EPS) was Tk 0.99 in H1 of FY23, compared to Tk 1.35 in the same period last year seeing a staggering decrease of 27 per cent year on year. This decrease is mainly due to rising costs of raw materials at both local and international markets. Currency devaluation and an increase in energy prices also harmed the company’s overall profitability.

Meanwhile, its net profit in the October-December period of FY23 was Tk 2.40 crore, compared to Tk 5.20 crore in the same period the previous year.

The company paid a 10 per cent cash dividend to investors for FY22.

The net operating cash flow per share (NOCFPS) fell from Tk 2.26 in the July-December period of FY21 to Tk 1.17 in the same period of FY22. Reason behind this fall is the significant increase in cash paid to suppliers and operating expenses.

Each share of Salvo Chemical was traded at Tk 61.80 on the Dhaka Stock Exchange (DSE) on Sunday’s trading session.