Exporter Nialco Alloys snaps out of Ukraine war blues, H1 profit jumps 1,182%
In a time when a lot of large-cap companies are struggling to remain afloat, a small company like Nialco Alloys bounced back hard from its business slowdown that was caused by the Russia-Ukraine war in fiscal 2021-22, and posted record high net profit in the July to December period of the ongoing 2022-23 fiscal year.
In the first half of FY23, the company's net profit jumped by a staggering 1,182% year-on-year and stood at Tk4.02 crore – which is even greater than the company's annual profits in each of the last five fiscal years.
Nialco Alloys is a manufacturer of copper alloy products and exports 100% of them to Europe, Africa, and Asia. As its business performance is fully dependent on its exports, the Russia-Ukraine war had severely affected the company's business in FY22 resulting in a 66% drop in revenue, and 58% drop in profit year-on-year.
The company said in its FY22 annual report that because of the war, demand for its products in Europe was very sluggish, which is why successful market deals could not be made. Hence, the production cost was much higher than the products' selling price.
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"Also, volatility in dollar prices and unstable market demands compelled the company to take an observe-and-proceed strategy."
Therefore, turnover dropped sharply, but the fixed costs remained the same. Thus, the profit declined significantly, the report said.
The Business Standard contacted Nialco's Company Secretary Tariqul Islam Chisty over phone for comments on how the SME company thrived, but he declined to comment.
But in its stock exchange filing on Monday, Nialco said its half-yearly earnings per share jumped to Tk1.41 from Tk0.11 in a year because of an increase in turnover.
Nialco Alloys at a glance
Among the 13 companies listed on the SME platform, Nialco Alloys was the first. In 2022, it raised Tk7.5 crore by issuing 0.75 crore shares for eligible investors through a qualified investor offer (QIO).
The company does not have any direct competitor in the country.
It manufactures high grade bronze and brass ingots including gun metal, phosphorus bronze, leaded bronze, aluminum bronze, manganese bronze, sand cast brass (SCB), high tensile brass (HTB), die cast brass (DCB), master alloys, phosphorus copper, etc.
Japan is one of its main markets, and in the last fiscal, 56% of its exports were to Japan.
On Monday, Nialco's share price soared by 5.42% and closed at Tk52.5 per share at the DSE, compared to the previous trading session.
