Listed paper & printing companies posted a double-digit sales growth for FY23 despite ongoing economic challenges and raw material price hikes amid a dollar crunch.
The sales growth is a sign that the paper industry has been gaining back businesses that were lost to the pandemic and the war-induced economic squeeze.
However, profit did not grow at the same pace as the revenue for costlier raw materials and energy price hikes.
Out of the five paper manufacturers that published their annual earnings, four secured higher income in FY23, compared to the year before, while one witnessed a reduction in profit. Another company, Khulna Paper & Printing is yet to disclose annual earnings.
Increased demand drove up aggregate sales of the five companies by 21 per cent year-on-year to Tk 18 billion in FY23, while their combined profit rose only 5.6 per cent year-on-year to Tk 755 million, according to the companies’ financial statements.
The paper industry had been struck hard when schools, colleges and universities, the main consumers of paper products, remained closed for long during the pandemic.
Latest financial data shows signs of recovery.
Bangladesh Monospool Paper and Sonali Paper witnessed a double-digit growth in profit, while Hakkani Pulp & Paper returned to profit after suffering losses in the previous year.
Hakkani Pulp managed to offset additional cost burden partially by increasing product prices.
Company secretary Mohammad Musa said prices of paper and paper products were up 70 to 80 per cent in FY23 from a year ago, leading to higher sales revenue.
Sonali Paper, a concern of Younus Group, saw a 22 per cent revenue growth, while its profit jumped 18 per cent year-on-year in FY23.
It produces white and printing papers, simplex papers and duplex papers. In August last year, it started producing aluminium foil paper boxes from a new product line.
Aluminum foil containers are used in family banquets and in the packaging of food items, such as airline snacks and western-style pastry baking, with the shape and size preferred by the customers.
Company secretary Md Rashedul Hossain said profit of Sonali Paper had gone up due to higher sales and other income.
Paper Processing and Packaging, and Bangladesh Monospool Paper Manufacturing – two concerns of Magura Group – have also posted higher revenue and profits.
The demand for paper products, diversified items in particular, has been increasing rapidly, but imports of raw materials have been disrupted by the dollar shortage.
The prices of raw materials have dropped in recent months in the global market after reaching historic highs last year, but local manufacturers were unable to get any benefit for the difficulty in LC (letters of credit) opening due to the dollar crisis, said industry insiders.
The paper industry is still facing problems in importing raw materials, said Shafiqul Islam Vorosha, president of the Bangladesh Paper Importers’ Association.
The local firms do not have enough raw materials to meet the rising demand for finished goods, he added.
Only Bashundhara Paper Mills, the market leader in the tissue industry and one of the major players in the paper industry, has reported an 11 per cent drop in profit, despite a 17 per cent revenue surge.
Company secretary M Mazeldul Islam said profit had declined due to higher raw material prices coupled with rising administrative and finance expenses.
The company’s costs of sales escalated 18 per cent in FY23, compared to FY22. On top of that, administrative expenses jumped 18 per cent year-on-year, while finance expenses 19 per cent, eroding profits.
Its short-term borrowing expenditure soared 23 per cent year-on-year to Tk 4.91 billion in FY23, leading to higher finance expenses.
All the paper companies saw share prices jump 5-86 per cent year-on-year in FY23.
As a result, the market-capitalisation of the sector was elevated by 23 per cent to Tk 41.5 billion at the end of FY23, accounting for 0.90 percent of the Dhaka Stock Exchange’s total market value.
On the back of revenue and profit growth, Monospool Paper saw the highest price surge – 27 per cent to Tk 321 in a month through Sunday.
On the other hand, Bashundhara Paper’s disclosure of a decline in annual income led to it stock’s shedding 5 per cent to Tk 61.90 during the period.
Sonali Paper’s share price rose more than 5 per cent to Tk 615, as the company issued one rights share for existing two shares in July last year.
Hakkani Pulp’s stock soared 18 per cent to Tk 66 in the month through Sunday, while the share price of Paper Processing increased marginally by 2.15 per cent to Tk 219.
Sonali Paper has remained stuck at the floor price of Tk 615.10 for more than a month despite the profit jump, while Khulna Printing saw a 67 per cent surge to Tk 16.9 each share.