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GPH Ispat records loss despite 25% revenue surge

Staff Correspondent
19 May 2023 00:00:00 | Update: 19 May 2023 00:21:38
GPH Ispat records loss despite 25% revenue surge

With a lack of industrial power supply, and an inimical US dollar price, steel maker GPH Ispat incurred a heavy loss of Tk 31.13 crore in the first nine months of the current fiscal year, although its nine-month revenue was 25 per cent up on a year-on-year basis.

Against this massive loss, the publicly traded company had a net profit of Tk 156 crore in the July-March period of the fiscal year 2021–22.

Although the steel manufacturer reported a loss in the July-March period of the fiscal 2022-23, the company’s revenue grew by 25 per cent to Tk 4,410 crore in the period, as per its unaudited financial statement.

The company’s revenue was Tk 3,527 crore in the first nine months of FY22.

Detailing the reasons behind the profit fall, the steel maker said its earnings were wiped out in the first three quarters of the current fiscal due mainly to a massive increase in the foreign currency conversion rate as well as the shortage of industrial power supplies, hampering production.

The costly dollar prices and the scarcity of industrial power supply disrupted its production immensely, the Chattogram-based company said.

The domestic currency taka lost its value by around 25 per cent in July–March of FY23 because of the crisis of the US dollar since the beginning of the Russia-Ukraine war.

GPH Ispat reported a loss per share of Tk 0.68 for the first nine months of fiscal 2022-23, against earnings per share (EPS) of Tk 3.39 for the same period last fiscal. The company’s EPS was Tk 1.16 for the January-March quarter of the ongoing fiscal, against Tk 1.34 for the same quarter last fiscal.

Its net operating cash flow per share was Tk 0.84 negative at the end of March of the fiscal 2022-23, which was Tk 0.21 at the end of the same month of the fiscal 2021-22.

The steel maker’s net asset value per share was Tk 26.12 as on March 31 this year, which was Tk 28.79 till June 30, 2022.

Listed in 2012, GPH Ispat shares remained stuck at the floor price of Tk 44.80 per share on the DSE on Thursday.

In the July-December period of the current fiscal year, the steel maker had also incurred a massive loss, as the company’s import costs swelled up enormously due mainly to the depleted value of the domestic currency against the US dollar during that time.

Besides, its export receipts were also exhausted in the first half of FY23, another reason for its profits to vanish.

The local steel maker, however, registered a stellar surge of 41.7 per cent in revenues in H1 of the fiscal 2022-23, but its earnings were drained due to the exorbitant costs to source raw materials, according to the company’s financial reports.

The firm’s revenues surged to Tk 2823 crore in the July–December of the ongoing fiscal from Tk 1992 crore in the same period last fiscal.

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, it had to incur a heavy loss in the July–December period of the running fiscal year.

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 last fiscal.

The steel maker’s foreign exchange transaction costs stood at Tk 147.16 crore in the first half 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 the July-December period of the fiscal 2021-22.

Although the listed company had not revealed the figure of export earnings in the first half of the current fiscal year, it said the amount was very negligible during the period.

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

According to Ashrafuzzaman, the steel manufacturer sells up to 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 the 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.

 

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