Some major paper firms fare well amid crisis

Highlights: 

• Two listed paper firms see double-digit profit growth
• Two incur losses again
• One reports profit fall
• One has yet to unveil half-yearly financials

Despite the dollar crisis that has made the import of raw materials challenging, several major players in the paper industry have fared well.

Of the six companies operating in this sector and listed on the country's capital market, three have reported profits for the first half of the current fiscal year.

And two of them – Bashundhara Paper Mills and Monospool Paper Processing – posted double-digit profit growth.

At the same time, two other firms have experienced losses similar to those of the previous year, while the sixth company has not yet released its financial reports for the July-December period.

According to industry insiders, although the prices of raw materials on the global market have dropped after reaching historic highs due to the outbreak of the Russia-Ukraine conflict last year, the paper industry is now grappling with difficulties in opening required letters of credit (LCs) to meet demand.

The paper industry had earlier faced a blow as educational institutions and offices were closed for a long time following the outbreak of the coronavirus pandemic.

Since the reopening of educational institutions, however, paper firms have rapidly rebounded, riding on the increased demand created during the pandemic.

Again, as the Russia-Ukraine war broke out last year, the industry faced another blow from supply chain disruptions and skyrocketing raw material prices in the international market.

Demand for paper products – diversified items in particular – has been increasing rapidly, but imports of raw materials have been disrupted by the dollar shortage.

Shafiqul Islam Vorosha, president of the Bangladesh Paper Importers' Association, told The Business Standard, "After the Covid-19 fallout, the paper industry has begun to turn around. As a result of the war, the industry is now facing a crisis in importing raw materials owing to the dollar shortage."

"LC opening is a big problem for the industry. Currently, we can open LCs for importing only 20% of the total demand for raw materials. As a result, local firms cannot produce products as per demand due to a lack of raw materials," he added.

M Mazeldul Islam, general manager of Bashundhara Paper Mills, told TBS, "Thinking that there might be a shortage of raw materials for the war, we had imported raw materials that was more than the demand."

He hoped that the company will not have problems with raw materials.

Md Rashedul Hossain, company secretary of Sonali Paper and Board Mills, told TBS, "Due to the dollar crisis, we faced a bit of a problem importing raw materials, but not as much as others."

"It was not possible to import as much raw material as was required," he added.

Listed paper firms' half-yearly performance

According to published financials, Bashundhara Paper Mills achieved a 21% growth in net revenue and a 68% increase in net profit in the first half of fiscal 2022-23 compared to the same period of the previous fiscal year.

Bashundhara Paper, the market leader in the tissue industry and one of the major players in the paper business, posted a profit of Tk30.45 crore, up from Tk18.13 crore in the first half of FY22.

"Its profit growth is driven by a decent growth in revenue. The management has adopted a responsive business strategy, which has resulted in increased sales and profit," said M Mazeldul Islam.

"The reduction in corporate tax rate from 22.5% to 20% has also led to an increase in profitability and profit as well," he added.

According to data from the Dhaka Stock Exchange (DSE), Hakkani Pulp & Paper Mills has incurred losses for the 2020-21 and 2021-22 fiscal years.

Earlier in fiscal 2019-20, the company made a profit of Tk14 lakh, but in FY18 and FY19, it incurred a loss of Tk3.93 crore.

In the first half of the current fiscal year, Hakkani Pulp & Paper incurred a loss of Tk1.56 crore.

Bangladesh Monospool Paper Manufacturing Company and Paper Processing & Packaging Limited, owned by the Magura Group, made a profit in the first half of fiscal 2022-23.

But Monospool Paper saw a 176% growth in profit to Tk2.93 crore and Paper Processing saw a 19% fall in profit to Tk1.86 crore than the same period in the previous fiscal year.

Monospool Paper's revenue grew by 19.91% to Tk36.85 crore, and Paper Processing's revenue fell by 11.40% to Tk24.41 crore.

Khulna Printing & Packaging incurred a loss of Tk80 lakh, which was Tk22.63 crore in the previous year.

Sonali Paper gets time extension to hold its board meeting

Sonali Paper and Board Mills has failed to hold its board meeting to approve half-yearly financials for the current fiscal year.

According to rules, a listed company gets one month to declare its quarterly financials after the period has ended.

As such, Sonali Paper was supposed to approve and declare the half-yearly financials by January.

However, because it did not declare the financials on time, the company was given a one-month time extension to hold the board meeting by March, according to a company official.