Textile mills’ profit skyrockets in Q2
Surge in yarn prices was the key reason, industry insiders say
The country's spinning and textile millers witnessed a jump in profit in the second quarter (October-December) of fiscal year 2021-22, despite a gas crisis and subsequent production losses in the period.
They posted up to 2,357% year-on-year growth in the quarter, according to an analysis on the financial statements of the 58 listed textile companies.
Mozaffar Hossain Spinning, Envoy Textile, Maksons Spinning and Metro Spinning were some of the top gainers.
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Industry insiders said they could bag more profit with higher production if there was no shortage in gas supply.
"We lost $1.75 billion production opportunities due to the gas crisis," Mohammad Ali Khokon, president of the Bangladesh Textile Mills Association, told a press conference at a capital hotel yesterday.
In the event, he also expressed concern over the proposed gas price hike and said such a hike would increase their production costs and reduce competitiveness.
"As a result, investment flow would be badly impacted," he added.
The financial situation of the textile millers can also be interpreted by the trend of apparel shipments as the millers are the main backward linkage industry of readymade garments.
According to the Export Promotion Bureau, the RMG exports increased by 46.21% to $10.84 billion in the second quarter of FY2021-22, while it was $7.42 billion in the corresponding period of the last fiscal (FY2020-21).
To keep pace with apparel export growth, yarn makers planned to invest about $2.5 billion to boost production capacity by the next year.
Talking to The Business Standard, Shams Mahmud, managing director of Shasha Denim, said the spinning millers were enjoying high growth in profits due mainly to the surge in yarn prices.
Echoing Mahmud, several other insiders said cotton prices rose 35% in the global market over the last couple of months, which was why they raised the yarn prices.
However, increased freight rates and feeder vessel shortage put them in different challenges, they added.
