Despite prevailing economic challenges, SS Steel Ltd. displayed a remarkable performance by doubling its profits year-on-year in the first quarter of this financial year, driven by increased earnings of its subsidiaries.
The listed steel manufacturer reported a consolidated profit of Tk 6.30 million for the July-September period of FY’24, a significant increase from Tk 3.15 million in the same quarter of the previous year.
And the company’s sales surged more than 46 per cent year-on-year to Tk 4.15 billion, according to a stock exchange filing on Sunday.
Company Secretary Md Mostafizur Rahman attributed the profit surge to substantial revenue generated by its subsidiaries, including Saleh Steel Industries and Al-Falah Steel.
He also highlighted that increased sales prices and a stability in raw material prices on the global market contributed to the company’s increased earnings.
The key construction material, MS rod, saw a 15 per cent rise in its price on the wholesale market this year, compared to the previous year.
Mr Rahman, however, said the amount of profit is still insignificant. He also expressed the hope that the company’s profit will increase in the coming quarters.
He explained that the foreign exchange market has recently been relatively stable, and there has been a slight easing of the raw material prices on the global market.
SS Steel, located in Tongi on the outskirts of Dhaka, specialises in manufacturing MS deformed bars of various grades, MS billet, and ingot. It also produces MS Billets from scrap.
In August 2020, the company acquired Chattogram-based Saleh Steel Industries, investing Tk 1.58 billion. Saleh Steel, established in 1995, has an annual production capacity of about 84,000 tonnes of mild steel (MS) rods and coils.
In April 2022, SS Steel acquired a 99 per cent stake of Al-Falah Steel and Re-Rolling Mills, a Narayanganj-based company. Its annual production capacity is around 64,800 tonnes of steel.
As part of its business expansion, SS Steel last month announced the acquisition of fixed assets from two non-listed steel makers — Super Steel and Peninsula Steel Mills, located at Sitakunda in Chattogram at an expense of Tk 1.30 billion.
The fixed assets include land (164 decimal), steel structure shed, building, capital machinery, and utility connection.
Listed in 2019, the SS Steel sees its stock remaining stuck at the floor price at Tk 16.60 each for more than a year.
Meanwhile, the Bangladesh Securities and Exchange Commission (BSEC) has expressed concerns about the escalating liabilities of SS Steel in recent years.
The regulator recently sought a summary of the utilisation of bank borrowings and other liabilities for the last three years.
The piling up of debt has left the company unable to make a handsome profit and declare decent dividends to its shareholders although sales revenue increased.
In FY’23, its sales almost doubled to Tk 14.86 billion while net profit slumped 98 per cent year-on-year to Tk 17.68 million. It declared a 2 per cent cash dividend only for general shareholders.
Currently, the country has about 40 active steel manufacturers, who altogether can manufacture 9 million tonnes of steel annually. Of them, Abul Khair Steel, GPH Steel, BSRM and KSRM meet more than half the yearly demand of about eight million tonnes.