Apex Footwear exports surge to Tk663cr, but profit plunges to Tk37 lakh
The company spent Tk13.37 crore in income tax, which amounted to 97% of its pre-tax profit. Interest expenses on its bank borrowings rose by 14% year-on-year to Tk39.64 crore
Despite a sharp rise in export earnings, Apex Footwear Limited reported a meagre Tk37 lakh profit from its export operations in the 2024-25 fiscal year, according to the company's audited financial statement.
During the year, the company's export income surged by 38% to Tk663 crore, up from Tk482 crore in FY24. However, profits from the export segment plunged due to higher tax expenses and growing interest costs on bank loans, resulting in one of the lowest profit margins in its recent history.
The company spent Tk13.37 crore in income tax, which amounted to 97% of its pre-tax profit. Interest expenses on its bank borrowings rose by 14% year-on-year to Tk39.64 crore.
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Over the last six fiscal years, Apex Footwear's export earnings have fluctuated, but profits had generally grown until this dramatic drop. The company's export profit was Tk5.87 crore in FY23 and Tk3.34 crore in FY24 before nosediving in FY25.
Dilip Kajuri, additional managing director and chief financial officer of Apex Footwear, told The Business Standard that the steep fall in export profit was largely due to the nature of tax deduction at source (TDS) on export proceeds.
"This is nothing new. In the export business, banks deduct the tax at source before depositing export proceeds into our accounts. This deduction is not tied to any particular period's export revenue, which is why the tax cost appears disproportionately high," Kajuri explained.
An industry insider also noted that footwear exporters must pay 1% of their export value as TDS, which is adjustable but not refundable. "If the final income tax payable is higher than the TDS, exporters can adjust it. But if it's lower, the TDS becomes the final tax – that's a big problem for exporters," he said.
Beyond exports, Apex Footwear's domestic business also faced challenges in FY25. Revenue from local sales increased by 9% to Tk1,110 crore, but profit from domestic operations fell by 8% to Tk13.18 crore.
Overall, the company's total revenue, combining both domestic and export operations, stood at Tk1,773 crore – 18% higher than the previous year. Despite the top-line growth, Apex Footwear's total profit dropped by 23% to Tk13.55 crore, reflecting the combined impact of higher taxes and borrowing costs.
On 26 September, Apex Footwear's board recommended a 50% dividend for FY25, comprising 25% cash and 25% stock, compared to a 35% cash and 10% stock dividend declared in the previous year. The proposal will be placed for approval at the company's annual general meeting scheduled for 26 November.
Industry analysts say that while Apex Footwear's strong export growth shows resilience in global markets, the company's financial performance highlights the challenges manufacturers face amid rising costs, tax burdens, and policy complexities that continue to squeeze profitability in the country's export-oriented industries.
