Listed steel makers BSRM and GPH reported such mindboggling sets of numbers for the quarter ending December that is hard to refute that the economic locomotive is back to running in full steam.
Steel is considered a bellwether sector of the economy.
Between October and December, BSRM, the country’s leading steel manufacturer, logged in a profit of Tk 108.9 crore, in contrast to Tk 13.9 crore a year earlier.
To put things into perspective, in just one quarter, BSRM made more profit than in its entire 2019-20 financial year, when it posted a profit of Tk 92.2 crore.
The quarter’s takings take BSRM’s profit in the first half of its 2020-21 financial year, which runs from July to June, to Tk 152.1 crore, up more than three times from a year earlier.
“Our sales growth was tremendous in the last three months,” Tapan Sengupta, deputy managing director of BSRM, told Dhaka Tribune yesterday.
What also helped flatter the bottom line was that the steel manufacturer had raw materials in store that were purchased at low prices, he said.
The pent-up demand from the 66-day-long countrywide general shutdown, which saw muted activities in private construction, real estate and infrastructure sectors, also played a part.
“Consumers could not place orders or buy during the shutdown. Besides, infrastructure works were on hold. They bought our products in the July-December period,” he added.
The company logged in sales amounting to Tk 2,344.2 crore in the six months, up 4.3 per cent year-on-year.
In a similar vein, GPH Ispat, another leading steel manufacturer, posted a profit of Tk 42.2 crore in the October-December quarter, up more than 2.6 times from a year earlier.
Like BSRM, the quarter saw GPH Ispat log in more profit than in their entire financial year that ended on June 30 last year, when it posted a profit of Tk 29.9 crore.
The second quarter's earnings take the 14-year-old steel makers profit in the first half of 2020-21 financial year to Tk 69.6 crore, which is more than double that from a year earlier.
“Our sales increased about two times in the period thanks to the new factory,” Kamrul Islam, executive director of finance of GPH Ispat, told Dhaka Tribune.
The new factory, which was set up at a cost of Tk 2,390 crore with state-of-the-art technology, began operations back in September.
The factory has the annual capacity to produce 840,000 tonnes of mild steel (MS) billet and 640,000 tonnes MS rod and medium section products, such as support beams and flat bars.
On the other hand, the interest rate on bank loans has come down, Islam said.
From April last year, the interest rate on bank loans came down to single-digit.
“The government’s stimulus package has helped propel the economic recovery and we got the benefit,” he added.
If the first-half trend continues, both the steel makers -- particularly GPH Ispat -- are heading towards a record year of profit.
The market too is viewing the two favourably.
Since July, shares of BSRM and GPH Ispat gained 31.2 per cent and 31.7 per cent respectively.
On Thursday, BSRM shares closed at Tk 70.2, down 0.6 per cent from the previous day. GPH Ispat though closed 1.9 per cent higher at Tk 32.
