• Wednesday, May 27, 2020
  • Last Update : 12:38 am

EPS of 35 out of 48 listed RMG sector cos fall

  • Published at 10:35 pm March 3rd, 2020
Export shipping containers
Bigstock

Sluggish exports, high utility charges blamed  

Earnings per share of 35 out of 48 export-oriented publicly traded textile and apparel companies at Dhaka Stock Exchange have registered fall in the first half of the current fiscal as export earnings have been on the decline. 

There are 56 export oriented textile, garment and accessories companies listed with the country’s premier bourse Dhaka and Chittagong Stock Exchanges.

Of the total  traded companies, 48 manufacturers disclosed earnings for the first half of current fiscal year, of which 35 or 72.93% registered negative growth in EPS compared to same period a year ago, DSE data show.   

Sluggish exports coupled with high utility charges have brought down the companies' EPS, industry people say. 

According to Export Promotion Bureau (EPB) data, during July-January period of the current fiscal year, Bangladesh’s exports earnings from the apparel sector witnessed a 5.71% decline to $19.06 billion.    

Apparels had earned $20.22 billion during the same period last year.

Stock market analysts and economists also raise questions about the transparency of financial reports of the companies.   

If the EPS of textile and apparel companies continue to decline, investors will lose interest in the sector and feel reluctant to invest in the upcoming Initial Public Offering (IPO) companies fearing losses.   

What sector people say 

“International trade and commerce is passing a critical time. In the last couple of years, the country's apparel sector witnessed hike in production cost due to rise in tariff of utility services but buyers did not increase prices of goods,” Abdus Salam Murshedy, managing director of publicly traded Envoy Textile, told Dhaka Tribune. 

According to Bangladesh Garment Manufacturers and Exporters Association (BGMEA), apparel sector production costs went up by almost 29.40% in the last four years. 

Industry people have long been seeking devaluation of currency to improve competitive edge.

“Despite lots of incentives and policy support, the sector is failing to overcome the dullness. This is due to appreciation of taka against US dollar, which eating up our competitiveness in the global market,” Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) first vice president Mohammed Hatem said. 

The government should rethink the exchange rate and offer a special rate on the amount of value addition, added the business leader.  

Misuse of bonded warehouse facilities is another reason, which dents the demands for local yarn and fabrics.   

"Some of the export-oriented apparel makers sell fabric and yarn in the local market illegally, which is imported duty free under bonded warehouse facility,” Khorshed Alam, owner of Little Star Spinning Mill, said.

"Local millers, as a result, have to sell at lower price, while there is unsold stock," he mentioned.   

Internal factors 

Some internal factors may have played a role in the negative EPS.

“Slower exports earnings have an effect on negative EPS but some external factors should be taken into consideration such transparency of financial report,” Centre for Policy Dialogue (CPD) Research Director Khondaker Golam Moazzem told Dhaka Tribune.  

Situation may worsen  

Sector people fear further deterioration in the apparel sector, adversely impacting the EPS of the listed companies. 

“Amid a gloomy outlook for the country’s apparel sector, the government has increased the prices of electricity, another blow to the production cost, which already increased manifold,” said Anwar-Ul Alam Chowdhury Parvez, chairman director of Argon Denims Limited. 

On Thursday, Bangladesh Energy Regulatory Commission (BERC) again increased the prices of electricity for retail consumers by 5.3% to Tk7.13 per unit and bulk consumers by 8.4% to Tk5.17 a unit, effective from March 1. 

59
55
blogger sharing button blogger
buffer sharing button buffer
diaspora sharing button diaspora
digg sharing button digg
douban sharing button douban
email sharing button email
evernote sharing button evernote
flipboard sharing button flipboard
pocket sharing button getpocket
github sharing button github
gmail sharing button gmail
googlebookmarks sharing button googlebookmarks
hackernews sharing button hackernews
instapaper sharing button instapaper
line sharing button line
linkedin sharing button linkedin
livejournal sharing button livejournal
mailru sharing button mailru
medium sharing button medium
meneame sharing button meneame
messenger sharing button messenger
odnoklassniki sharing button odnoklassniki
pinterest sharing button pinterest
print sharing button print
qzone sharing button qzone
reddit sharing button reddit
refind sharing button refind
renren sharing button renren
skype sharing button skype
snapchat sharing button snapchat
surfingbird sharing button surfingbird
telegram sharing button telegram
tumblr sharing button tumblr
twitter sharing button twitter
vk sharing button vk
wechat sharing button wechat
weibo sharing button weibo
whatsapp sharing button whatsapp
wordpress sharing button wordpress
xing sharing button xing
yahoomail sharing button yahoomail