Apex Footwear's Tk616cr revenue yields just Tk1cr profit amid rising costs, tax pressures
At the end of the first three quarters, its earnings per share stood at Tk4.54
Apex Footwear PLC, the country's leading footwear manufacturer and exporter, reported a staggering turnover of Tk616 crore during the January-March quarter of the 2025-26 fiscal year, yet managed to retain only Tk1.06 crore as net profit.
This disparity reflects a razor-thin profit margin of just 0.17%, a figure that trails significantly behind industry peers such as Bata Shoe.
The company's latest unaudited financial statement reveals that despite a 14% growth in revenue compared to the same period last year, the bottom line was heavily weighed down by a combination of surging finance costs, higher tax burdens, and rising operational expenses.
During the third quarter, spanning January to March 2026, Apex Footwear's revenue climbed to Tk615.96 crore from Tk540 crore in the corresponding period of the previous year. While the net profit saw a modest 9% year-on-year increase, it reached only Tk1.06 crore, yielding an earnings per share of Tk0.54.
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The financial data indicates that the cost of doing business has escalated sharply, with the cost of goods sold rising by 10% to Tk488 crore.
Furthermore, marketing, selling, and distribution expenses grew to Tk93.37 crore, while finance costs – primarily driven by rising interest rates on loans – jumped by 16% to reach Tk16.99 crore.
On a broader scale, the company's performance for the first nine months of the current fiscal year (July-March) showed a similar trend of high volume but constrained profitability. Cumulative revenue for the nine-month period reached Tk1,559 crore, up from Tk1,369 crore in the previous year.
Cumulative net profit for the period stood at Tk8.91 crore, compared with Tk6.99 crore in the same period of the previous financial year, indicating improved earnings but continued pressure on margins.
Despite the thin margins, the company maintained a strong financial position, with a net asset value per share of Tk351.89 and net operating cash flow per share of Tk122.92 as of March 2026.
The significant squeeze on profit margins has been attributed largely to the current taxation framework governing export proceeds.
A senior official of the company said the sharp decline in margins has been worsened by the nature of tax deduction at source (TDS).
He noted that in the export business, banks deduct tax at the source immediately upon the receipt of export proceeds. "Because these deductions are not strictly tied to the export revenue of a specific accounting period, the tax cost often appears disproportionately high relative to the quarterly profit."
Industry insiders further elaborated that footwear exporters are required to pay 1% of their total export value as TDS. Although this amount can be adjusted against final income tax at the end of the year, it is not refundable.
This creates a systemic hurdle for companies operating on low margins; if the final calculated tax on income is lower than the amount already deducted as TDS, the company cannot claim a refund, effectively turning the deduction into a final tax that erodes the actual profit.
Following the disclosure of these financial results, investor sentiment on the Dhaka Stock Exchange remained cautious. Shares of Apex Footwear closed 0.83% lower at Tk202.60 today.
Based on the latest quarterly data, the company's price-to-earnings ratio stands at 33.47, while its dividend yield is 1.23%.
