GPH Ispat returns to profit as exchange loss minimised

GPH Ispat Limited, a leading steel manufacturer in the country, reported an  impressive year-on-year growth in the second quarter of the current fiscal year riding on increased exports and local sales.

During the October to December (Q2) period of FY24, the company recorded a profit after tax of Tk31.84 crore, a significant turnaround from the Tk5.59 crore loss incurred in the same period of the previous year.

The company's improved performance was due to decreased finance costs resulting from ease in exchange loss in foreign currency transactions, GPH Ispat said in a disclosure on Thursday.

Besides, payment against suppliers and others during this period was less than the collection from customers resulting in a positive impact on net operating cash flow per share, according to the disclosure.  

The company earlier fell into losses due to a significant increase in foreign currency conversion rate as well as a shortage of power supply which disrupted production and also affected production costs adversely. 

In the second quarter FY24, the revenue of the company increased by 13.65% to Tk1,715 crore from Tk1,509 crore compared to the same period of the previous year.

Of these, local revenue stood at Tk1,699 crore and export revenue reached Tk16 crore.

The selling and distribution expenses of the company stood at Tk22 crore which was 31% lower from one year ago.

Its earnings per share was at Tk0.66 and its net asset value per share stood at Tk50.80 end of December 2023.

In the July to December period, its gross revenue stood at Tk2815 crore and made a profit after tax of Tk15.38 crore. 

During the period, foreign currency exchange loss of the company stood at Tk52 crore from Tk147 crore compared to a year ago.

GPH Ispat faces a substantial loan burden, primarily acquired for the establishment of a billet plant and MS Rod plant in Chattogram. 

As of the end of December this year, its long-term loan amounted to Tk2,574 crore and its short-term loan stood at Tk3,033 crore.

Earlier, GPH Ispat recommended a 5% cash dividend for its general shareholders and a 5% stock dividend for all shareholders for fiscal 2022-23. 

The decision to declare a lower dividend than the previous year is attributed to a sharp fall in profit, primarily due to high inflation in raw material costs. 

In the last fiscal year, GPH Ispat experienced a significant drop in net profit, plummeting over 81% to Tk26.76 crore compared to the previous year. 

The share price of the company rose 7.55% to Tk34.20 on the Dhaka stock exchange, on Thursday. 

As of 31 December 2023, sponsors and directors jointly held 49.61%, institutions 17.88%, and the general public 32.51% shares in the company.

The commercial production of the factory commenced on 21 August 2008. 

The principal activities of the company are manufacturing and trading of iron products and steel materials of all kinds and marketing thereof.

The company also declared the commercial production of a new expansion plant and marketed its best quality product "GPH Quantum" steel.