Steel, pharma recover better than others

The devastation wrought by the pandemic is still all too real for most businesses. The scars of the crisis are fresh, but a review of recent data on local corporates shows that recovery is back with some exceptions.

Absorbing shock in the wake of shutdown, a number of local business enterprises have turned around.

Some big names such as steel manufacturer BSRM, GPH, drug-makers Beximco, Square, Renata, Acme Laboratories, and biscuit producer Olympic Industries have posted profit growth for the July-September quarter. 

However, there is a mixed picture across the industries and within the companies as at least half the local manufacturing companies are yet to post a better business outcome compared to what was a year ago. 

Pharmaceuticals and fast-moving consumer goods companies were among those that performed comparatively better during the 66-day shutdown till the end of May. 

As the supply chain got disrupted and doctors wrote fewer prescriptions, not all pharmaceutical companies did well during the shutdown; but with the reopening of the economy, they kept witnessing better sales and profits, according to M Shafiuzzaman, secretary to the Bangladesh Association of Pharmaceuticals Industries. 

Shafiuzzaman told The Business Standard that companies with specialised products, a large portfolio or a strong marketing channel are enjoying a comparatively higher sale.

Big drug companies such as Square, Beximco Pharmaceuticals, Renata, Acme Lab, and ACI – all posted higher sales and profits in the July-September quarter. 

Meanwhile, steel, cement and some other sectors dependent on construction were on the list of those hit hardest by the shutdown during the April-June period, but now are enjoying an increasing demand.

Leading steel maker BSRM Group has two companies listed with the local bourses – BSRM Steels and BSRM Limited.

The two suffered 70-96% drop in their April-June profits as their sales had dropped drastically and they had to bear a large amount of unavoidable costs. 

"Thanks to the reopening of the economy, we have since managed to meet our sales growth target each month," said Shekhar Ranjan Kar, chief financial officer (CFO) of BSRM Group. 

Both his companies posted a double-digit sales growth in their core business of steel products. With the help of some saved costs, their quarterly profits grew 40% and 152% compared to those a year ago. 

"So far, the steel industry is yet to regain the entire demand it had over the same season in recent years though I have not gone through the entire industry updates," said Marzanur Rahman, a director of RSRM Steels, another listed steelmaker. 

His observation being the government construction projects are rolling on, but not in lockstep as they were previously. 

Real estate developers are placing their orders but they have not yet come out of the long slowdown, he said, adding that a large number of individual builders, especially, those who belong to the middle class, are deferring their home constructions. 

The lackluster trend of the previous year now appears to be going away. The construction industry was in a slowdown in the second half of 2019, and compared to the humble base, a fair recovery looks positive enough, said the second generation steel entrepreneur. 

Premier Cement Mills Ltd, absorbing a loss in the April-June quarter, posted 93% higher profits for the July-September quarter. 

Its CFO Shafiqul Islam Talukder is happy with the quarterly business performance, but like steel industry CFOs, he is also worried about the credit figures stuck in retailer outlets. 

"We made some prudent decisions in the previous quarter to procure raw material that helped us save around 5% in raw material cost," he said, adding that saving some for tax provisions helped the company profit grow. 

Shinepukur Ceramics, a manufacturer of fine porcelain tableware, suffered an export slump during the pandemic, but its cheaper porcelain products are selling better in local market since the import of those products from China hit snag. 

The ceramic tableware company posted its profit growth in both shutdown and post-shutdown quarters. 

Olympic Industries, an unbeaten leader of biscuit manufacturers, posted 18% year-on-year sales growth and 2% profit growth in July-September quarter.