Sonali Paper profits grow on stock investment returns

Sonali Paper and Board Mills once again reported big profits mainly riding on good returns from its investments in the stock market.

That means the profit of the company changes drastically depending on the mood of the capital market.

In the first nine months of the fiscal 2021-22, Sonali Paper has seen better growth in its returns from stock investments than that of the core business – media, liner, simplex, duplex paper board, papers, and aluminium foil papers.

As a result, in FY22, the revenue and profit grew 44% and 48% respectively compared to the previous fiscal year.

There has been good growth in revenue and profit although the company experienced a big loss in the final quarter of the financial year due to the capital market volatility.

The company declared a 40% cash dividend for its shareholders due to the huge growth in profits.

In the previous fiscal year, it paid a 40% dividend, including 20% cash and 20% stock.

The loss in Q4 of FY22

According to its financial statements, the company incurred a loss of Tk19 crore in the April to June quarter of FY22, despite an increase in its revenue.

Company Secretary Md Rashedul Hossain told The Business Standard, "The core business fared well but the stock investment has not generated good returns, which has led to the loss."

Stock investment returns doubled

Sonali Paper snapped out of its loss in the last quarter of FY22 and posted a Tk23.14 crore profit in the next quarter, i.e. the first quarter of the current fiscal.

According to company financials, its income from share trading doubled to Tk25.55 crore in the first quarter of FY23.

That means Sonali Paper's earnings from equity trading rose 112% in the quarter.

Md Rashedul Hossain said, "The profit increased as the company secured good returns from its stock investment in this quarter."

Sonali Paper and Board Mills was incorporated in 1977 and got listed on the Dhaka Stock Exchange in 1985 and on the Chittagong Stock Exchange in 1996.

Younus Group took over the company after buying all its shares in 2006.

After 17 years of acquisition, the new management has applied for bringing the company back to the mainboard in 2020.

The Bangladesh Securities and Exchange Commission (BSEC) approved the application and it was relisted on the stock exchange.