Most of the listed spinning and textile millers witnessed a jump in profit in the third quarter of the current fiscal year riding on spiralling yarn prices and revitalised apparel exports.
The business outlook differs strikingly with a gas crisis, volatile cotton price in the international market and a global freight cost hike in the January-March quarter, as the mills posted up to 447% year-on-year growth in the quarter, according to financial statements of the companies.
Fifty-eight textile and spinning companies are listed on the Dhaka Stock Exchange (DSE) and 45 of them have published their third-quarter unaudited statements.
According to the statements, 29 companies saw an increase in profit, seven declined and nine incurred losses.
Tamijuddin Textile, Envoy Textile, Simtex, Shasha Denim, Square Textile, Monno Fabrics and Maksons Spinning were some of the top gainers.
Besides, Anlima Yarn, Evince Textile and Stylecraft incurred losses, while they were in profit in the previous year at the same time.
The profits of Aman Cotton, Alhaj Textile, Delta Spinners, ML Dyeing and Rahim Textile decreased in the third quarter of fiscal 2021-22.
Industry insiders said they could bag more profit with higher production if there was no shortage in gas supply. As well as, the increasing transportation expenses have pushed up the costs of business.
However, an increase in yarn and textile prices has helped the companies boost their profits, they added.
The financial situation of the textile millers can also be interpreted by the trend of apparel shipments as the millers are the main backward linkage industry for readymade garments.
According to the Export Promotion Bureau, RMG exports have increased 45% to $11.52 billion in the third quarter through March, compared to $7.94 billion in the corresponding period of the last fiscal year.
To keep pace with apparel export growth, yarn makers planned to invest about $2.5 billion to boost production capacity by next year.
Talking to The Business Standard, Shams Mahmud, managing director of Shasha Denim, said the spinning millers had earlier been enjoying high growth in profits due mainly to the surge in yarn prices.
Echoing Mahmud, several other insiders said cotton prices rose 35% in the global market over the last couple of months, which was why they raised the yarn prices.
Shasha Denim said in its financial statement highlighted the reason for a significant deviation in earnings per share (EPS) saying the company made a remarkable revenue during the period.
"Revenue and gross profit growth of the company was registered 44% and 23%, respectively. On the other hand, EOS Textile Mills, a subsidiary company of Shasha Denim has contributed to an increase in the consolidated earnings of the company," he added.
In its statement, Square Textile said its EPS went up riding on an increased production and sales price of yarn.
However, investors did not show any interest in the positive growth momentum in the textile sector as most companies' shares were trading with a downward trend on the DSE.
According to the EBL Securities weekly market statements, the textile sector failed to give a return to its investors since March this year, which caused the investors to suffer further losses.
At present, 13 companies' shares are being traded below the face value of Tk10 on the DSE.