Industry News

Singer Bangladesh’s profit soared 615 per cent to Tk 522 million last year, compared to the previous year, as it increased product prices to offset rising cost.

The earnings per share (EPS) went up to Tk 5.24 for the year from a mere Tk 0.73 for 2022.

The electronic and home appliance manufacturer’s revenue, however, remained almost static in 2023, compared to the year before.

It maintained its business performance, while navigating macroeconomic challenges and an overall de-growth of the industry, by adjusting sales prices for all products.

“Singer strategically took strong pricing policy, optimized the expenses, and shifted from trading goods to manufactured products in order to secure the profit margin,” said the company in its earnings note published on Monday.

Encouraged by the profit growth, the board of directors of the company declared a 35 per cent cash dividend for 2023, increased from 10 per cent for the year before.

The company’s gross profit margin increased to 28.8 per cent in 2023 from 23 per cent in the previous year.

The earnings data is a manifestation of Singer successfully overcoming challenges posed by the devaluation of the taka against the dollar, restrictions on opening letters of credit, rising finance costs, ongoing supply-side crises caused by the Ukraine war, and undue turbulence during the national election.

The financial cost was higher in 2023 than the previous year.

Due to a 2 per cent increase in the average interest rate in 2023, finance expenses shot up by 10 per cent from 2022, said the company.

Singer is strongly present in the appliances market and looks to expand its operation in the medium to long term. By leveraging its global expertise, scale, knowledge, and brand image, Singer said, it hopes to further strengthen its market position.

The net operating cash flow per share stood at Tk 22.76 in 2023, up from Tk 18.19, reflecting a considerable improvement.

Singer recently acquired a 35-acre land at the Bangladesh Special Economic Zone, popularly known as the Japanese Economic Zone at Araihazar, Narayangonj, to establish a state-of-the-art manufacturing facility that would help manufacture a range of electronic products complying with international standards.

Meanwhile, the stock went up 0.46 per cent to close at Tk 153.30 per share on Monday on the Dhaka Stock Exchange.

singer price hike products

At least 15 percent of the country’s 71 independent power producers were sitting idle for 80 percent of the time last fiscal year, raising questions about their need.

Bangladesh Power Development Board (PDB) purchased electricity from the mostly idle power plants at rates much higher than the average purchase price of Tk 14.62 per kilowatt-hour (kWh).

The power plants that are sitting idle 80 percent of the time are: Raj Lanka Power, Summit Barisal Power, Bangla Trac Power Unit-1, Bangla Trac Power Unit-2, Aggreko Energy Solution Aowrahati, Aggreko Brahmangoan, APR Energy, United Mymensingh Power, Paramount Btrac Energy, BR Powergen Ltd, and United Payra Power.

The purchase price from the 11 power plants was between Tk 26.08 per kWh to Tk 56.33 per kWh.

“The reason behind the excessive unit cost is that the power plants were sitting idle,” said Mohammad Tamim, dean of the chemical and material engineering department at the Bangladesh University of Engineering and Technology.

Every power plant has a fixed cost including capacity charge, staff salaries and bank loans, while their variable cost is the fuel cost, which it gets from the government.

The unit price is calculated by dividing the total cost by the total electricity output.

“If a power plant produces electricity at 50 percent or 60 percent plant load factor (PLF), it produces more electricity over the year and that impacts the total cost,” he said.

In other words, the 11 plants were operating at less than 20 percent PLF, which is the ratio between the actual energy generated by the plant and the maximum possible energy that can be generated with the plant working at its rated power and for a duration of an entire year.

Even if a plant produces no electricity, it still gets its fixed costs. After dividing the total cost by the total power output, the unit price is fixed, which is higher for low output plants, Tamim said.

Save for Raj Lanka Power and United Mymensingh Power, the power plants sat idle for 80 percent of the time in the previous five fiscal years.

‘If a power plant produces electricity at 50 percent or 60 percent plant load factor, it produces more electricity over the year and that impacts the total cost.’

— M Tamim, professor at Buet

“If a power plant produces less than 20 percent of its capacity, there is no need for it in the area,” Tamim added.

The PDB, which logged in record losses amounting to Tk 47,788 crore for fiscal 2022-23, did not disclose the capacity payments made in its annual report. It also did not give a breakdown of fixed costs and variable costs.

In fiscal 2022-23, the 11 plants were paid a total of Tk 220.5 crore by the PDB.

Summit Power referred the correspondent to the PDB spokesman for comment on Summit Barisal’s low PLF. Bangla Trac and United Power could not be reached for comment.

The lower production by the 11 plants is due to the commissioning of the large power plants, said Shameem Hasan, spokesman for PDB.

Summit Barisal Power’s low PLF is due to the commissioning of the Payra 1320MW thermal power plant in 2020, he said.

When asked about the capacity charges paid to the 11 plants, he said: “For now, we have to pay the capacity charges. The government must make a call on whether it wants to continue paying capacity charges in the future.”

In principle, the PDB has cut back on purchasing electricity from high-cost power plants that burn furnace oil and diesel.

Overcapacity is one of the big concerns for the power sector, said Khondaker Golam Moazzem, research director for the Centre for Policy Dialogue.

The reserve power generation capacity will exceed 50 percent by next year.

“This should be reduced,” he said, adding that the existing contracts with the power plants should be reviewed and old, inefficient plants should be retired.

“All contracts must have the no-electricity-no-pay clause added in.”

The macroeconomic challenges the country is facing at the moment are a result of the faulty import-dependent nature of the power and energy sector, Moazzem said.

“Bangladesh’s energy generation model, especially the one used to purchase power from IPPs, is not only weakening the PDB but is also hurting the overall economy.”

In an extraordinary measure, the government is set to issue Tk 14,000 crore worth of special bonds to clear mounting arrears to the IPPs thanks to the narrow fiscal space.

Moazzem also called for scrapping the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010, also known as the indemnity law for the power sector.

“Because of the indemnity law, the power purchase agreements are not transparent and we are not able to get competitive pricing. Because of the indemnity law, PDB has to buy expensive power,” he added.

Power Cell Director General Mohammad Hossain, however, denied that the power sector’s overcapacity is high.

“Overcapacity is not much as there are some power plants under maintenance and some are needed for peak hours.”

The government counts many abandoned or old power plants in calculating the overall capacity, which increases the number.

“But ultimately the overcapacity is more or less 20 percent, which is required.”

source: dailystar.net

11 power plant lazy working

Biscuits and confectionary sales of Olympic Industries have crossed Tk 2,500 crore for the first time in its history, thanks to rising demand for packaged bakery and confectionery items.

According to the largest biscuit and confectionary seller of Bangladesh, its total sales revenue rose 20.2 percent year-on-year to Tk 2,579 crore in fiscal year 2022-23.

Of the amount, Tk 2,536 crore came from selling biscuits, confectionery, bakery and snack products. This includes exports worth Tk 26 crore.

The remaining Tk 43 crore came from dry cell batteries.

Although its revenue was higher than that in fiscal year 2021-22, the amount of biscuits, confectionery, bakery and snack products sold, however, dropped 8.34 percent to 118,706 tonnes.

In adjustments with high prices of raw materials, Olympic Industries reduced the weight of the products in the packets to retain prices the packets were already being sold at, according to the annual report.

It has been an ongoing and lengthy process to make adjustments with the rise in the prices of raw materials, it said.

“The work, however, has been essential in moving toward normalised margins while providing price points acceptable in the market to ensure sales,” the company said in its financial report.

Prices of all the raw materials — refined flour, oil and sugar — soared but prices of finished goods could not rise at that level, said Satya Ranjan Mondal, general manager of the company’s accounts and finance.

On top of that, the local currency, taka, was devalued in the last two years at a high rate against the US dollar.

As a result, the profit margin has been affected over the last two years, he said.

In spite of all this, the company’s profits rose and it declared handsome dividends for its shareholders this year, he added.

Price of refined flour rose 75 percent, oil 17 percent, and sugar 91 percent over the past two years, according to the Trading Corporation of Bangladesh.

The company’s profits swelled 29 percent year-on-year to Tk 155.6 crore in fiscal year 2022-23.

The company’s profit margin, meaning profits in context to sales, rose in the year to 6.04 percent.

However, it is still much lower than the double digits of 11.3 percent, 12.7 percent and 13.6 percent achieved in fiscal years 2020-21, 2019-20 and 2018-19 respectively.

Mintu Kumar Das, company secretary, said the company accounts for around 90 percent of local market sales of such products and it has potential to grow further.

Olympic Industries has a capacity to produce 148,601 tonnes of biscuits, confectionery and “flavoured” saline a year.

In fiscal year 2022-23, it utilised over 80 percent of the capacity.

In another development, the company is planning to make investments in order to meet high demand for biscuits.

The plans include purchasing land measuring 86 decimals at a total cost of Tk 3 crore, inclusive of registration charges and other miscellaneous expenses.

Moreover, it is going to import a high-speed instant noodles production line from Japan spending Tk 24.75 crore to enhance its existing production capacity from 8,316 tonnes to 19,008 tonnes per annum.

It also decided to import a baked snacks processing line for Tk 3 crore, according to the annual report.

source: dailystar.com

olympic biscuit sales industries