Going through the books of 29 such companies, 24 registered negative EPS in H1 of FY21
Earnings per share (EPS) of most of the export-oriented and publicly traded textile and apparel companies at the country’s twin bourses have recorded negative trends in the first half of the current fiscal 2020-21 as exports dipped due to the Covid-19 pandemic.
Going through the books of 29 such companies, 24 registered negative EPS in H1 of FY21, compared to the same period of the previous fiscal year.
There are a total of 56 export-oriented textile and garment companies listed with Dhaka and Chittagong Stock exchanges.
Sluggish exports last year had sent the earnings of those companies down, as the pandemic hit businesses hard.
According to Export Promotion Bureau (EPB) data, Bangladesh’s exports earnings from the apparel sector saw a 3 per cent decline to $15.54 billion during July-December period of 2020, against $16 billion in the same period of 2019.
However, apparel exports posted 17 per cent negative growth to $27.5 billion in 2020.
Industry insiders blamed the pandemic for the downtrend in earnings, as it disrupted the supply chain and forced demand for goods to fall, as a result of the shrinking income in exporting countries.
During the July-December period of 2020, consolidated EPS of Square Textile was Tk 0.79 as against Tk 0.84 for July-December 2019 as per the unaudited financial report for H1 of FY21.
Meanwhile, its consolidated net operating cash flow per share (NOCFPS) was Tk 5.56 for July-December 2020 as against Tk 3.57 for July-December 2019.
Consolidated net assets value (NAV) per share was Tk 36.07 as on December 31, 2020 and Tk 36.29 as on June 30, 2020.
EPS decreased due to increase of finance cost as well as decrease of yarn price in international market during the aforesaid period, Square Textile explained in its financial statement posted on the Dhaka Stock Exchange (DSE) website yesterday.
Envoy Textile, another export oriented fabric manufacturer also recorded negative growth in earnings.
As per the unaudited financial statement for the first half of the current fiscal year, its EPS was Tk 0.37 for July-December 2020 as against Tk 1.15 for July-December 2019.
NOCFPS was Tk 4.73 for July-December 2020 as against Tk 1.08 for July-December 2019. NAV per share was Tk 37.66 as on December 31, 2020 and Tk 38.43 as on June 30, 2020.
Earnings of the company dropped mainly due to the unprecedented impacts of Covid-19 pandemic, which has disrupted the supply chain and ate up demands of goods, Abdus Salam Murshedy, managing director of Envoy Textile, told Dhaka Tribune.
People's income dropped across the world as they lost their jobs, as well as reduced working hours. As a result, people's expenses for clothing products were cut, which sent the demands of clothing products down, he also said.
Global brands and retailers cancelled or held work orders and cut prices of goods. Besides, manufacturers have to pay huge discounts on shipped goods, said Murshedy.
As per BGMEA data, global brands and retailers canceled or held orders of $3.18 billion during the first wave of the pandemic.
On top of that, a good number of exporters failed to realise dues of reinstated orders, which posed a great threat to earnings and already incurred financial losses, said Murshedy, also a former BGMEA president.
As per the unaudited financial report, EPS of Esquire Knit Composite was Tk 1.13 for July-December 2020 as against Tk 1.53 for July-December 2019. NOCFPS was Tk 1.85 for July-December 2020 as against Tk 1.89 for July-December 2019.
NAV per share (with revaluation reserve) was Tk 51.75 as on December 31, 2020 and Tk 50.61 as on June 30, 2020. NAV per share (without revaluation reserve) was Tk 37.03 as on December 31, 2020 and Tk 35.88 as on June 30, 2020.
Since the number of shares increased compared to the previous year, the earnings per share came down despite having a rise in revenue, said Mustafizur Rahman, chief financial officer of Esquire Knit Composite.
"On the other hand, the cost of business increased due to the pandemic as we have to pay workers even after keeping them idle due to the lockdown. Other operational costs also went up," said Rahman.
Companies which recorded negative EPS are Square Textile, Envoy Textile, Saiham Textile, Generation Next Fashion, Safko Spinning, Nurani Dyeing & Sweater, Simtex Industries, ML Dyeing, Saiham Cotton, RN Spinning, Regent Textile Mills, Prime Textile, Mozaffar Hossain Spinning Mills, Paramount Textile, Rahim Textile, Desh Garments, Shasha Denim, Zahintex Industries, Anlima Yarn, Delta Spinning, Style Craft, Hwa Well Textiles (BD), Esquire Knit Composite and Dulamia Cotton Spinning Mills.
Only Tosrifa Industries, HR Textile, Matin Spinning Mills, Apex Spinning and Al-Haj-Textile Mills posted positive earnings.