Most listed textile firms show resilience in H1, post growth despite challenges

Despite facing political instability, economic uncertainty, and worker unrest, the majority of listed textile companies posted year-on-year revenue and profit growth in the first half of the current fiscal year 2024-25.

Out of 58 listed textile firms, 43 have released their financial statements for the July-December period. Of these, 26 companies recorded profit growth, eight reported a decline, another eight incurred losses, and one posted unchanged profits. 

Fifteen firms have yet to disclose their financial reports, with several of them, including Family Tex, Kattali Textile, New Line Clothings, Nurani Dyeing, and Tung Hai Knitting, currently out of operation.

Textile millers noted that the devaluation of the local currency had a somewhat positive impact on the sector, particularly benefitting larger companies. These firms, with higher production capacities, greater operational efficiency, and stronger buyer trust, were better positioned to withstand economic challenges.

Market insiders, however, pointed out that most listed textile firms remain fundamentally weak, with 22 classified under the Z category — commonly referred to as "junk stocks" — due to their failure to pay dividends and, in some cases, ceasing operations altogether.

According to the managing director of a brokerage firm, a handful of textile companies continue to thrive due to efficient management and strong corporate governance practices. As a result, their businesses have maintained steady growth despite an unfavourable economic environment.

However, he added that most loss-making companies fail to follow good corporate practices. They managed to get listed on the market with assistance from the securities regulator, despite lacking the necessary qualifications to do so.

Top performers in the textile sector

Malek Spinning emerged as the top revenue and profit earner among listed textile firms, reporting a 15% rise in revenue to Tk1,350 crore, while its profit surged 7% to Tk84.35 crore.

Square Textiles secured the second position with a 29% revenue growth to Tk1,252 crore and a 26% rise in profit to Tk75.57 crore.

Envoy Textiles ranked third, achieving a 30% increase in revenue to Tk899 crore and a remarkable 148% surge in profit to Tk60.13 crore.

Speaking to The Business Standard, Envoy Textiles Managing Director Tanvir Ahmed attributed the company's strong performance to consistent full-capacity orders from buyers and a positive response from international markets.

"We have positioned ourselves well with our customers through product quality, diversification, and excellent service. Additionally, our two offshore marketing offices help us expand market share and secure better prices," he said.

Tanvir also noted that while rising gas prices, wages, and interest rates have slightly impacted business, growth would have been even higher without these challenges. 

The denim manufacturer has already booked full-capacity orders until March, with forecasts extending to mid-April – an impressive feat, as most denim mills typically secure orders only 15 days in advance.

Square Textiles stated in its report that revenue growth in the first half was driven by increased yarn production from its new project in Gazipur.

Meanwhile, Far East Knitting and Dyeing posted impressive growth in both revenue and profit, with revenue surging 82% to Tk487 crore. The company also turned around from a Tk7 crore loss in the first half of the previous fiscal year to a Tk16 crore profit this year.

Export performance

Export earnings grew 12.84% year-on-year in the first half of the current fiscal year, reflecting the resilience of the apparel sector, which has performed well despite production disruptions caused by prolonged labour unrest in August and September.

According to provisional data from the Export Promotion Bureau (EPB), merchandise exports totalled $24.53 billion during July-December, an increase from $21.74 billion in the same period the previous year.

As the country's primary export earner, the RMG sector contributed $19.88 billion during the first half, reflecting a 13.28% growth and accounting for over 81% of total export earnings. This marks an increase from $17.55 billion in the same period of the previous year.

Within the sector, knitwear exports contributed $10.83 billion, while woven garment exports accounted for $9.05 billion.