Shipping Corporation gains 11pc profit surge on higher revenue, sale of ships

The Bangladesh Shipping Corporation (BSC) secured an 11 per cent year-on-year growth in profit to Tk 755 million in January-March this year, driven by higher revenue and capital gains from sale of fire-damaged lighter ships.

Earnings per share rose to Tk 4.95 in the quarter to March from Tk 4.47 in the same quarter last year, according to a stock exchange filing on Wednesday.

The Corporation's nine-month profit also soared 30 per cent year-on-year to Tk 2.19 billion through March this year.

About the profit jump, the state-run oceangoing vessels' management authority said in its earnings notes that higher freight charges on the international routes and capital gain from the sale of lighter vessels -- MT Banglar Jyoti and MT Banglar Sourav -- contributed to the profit growth.

It is, however, yet to publish detailed financial statements.

Banglar Jyoti and Banglar Sourav were severely damaged in separate fire incidents in September and October last year. The BSC sold these oil tankers for Tk 460 million, including VAT and tax, in February this year.

The 37-year old oil tankers were sold for scrap through international bidding as the vessels were no longer usable due to significant damage in the fire incidents, said Commodore Mahmudul Malek, managing director of the BSC.

The BSC invited international bids in December last year and Jiri Subedar Ship Recycling Industries secured the contract. The Jiri Subedar officially took possession of the vessels in March after clearing the payment.

Cost cutting measures by the current management also contributed to the increase in profit, said Mr Malek.

Other factors that helped the company earn more are the enforcement of the Bangladesh Flag Vessels (Protection) (Amendment) Act, appreciation of the US dollar and higher interest income from fixed deposits.

The flag vessels act mandates that government entities, such as the Bangladesh Petroleum Corporation and the Bangladesh Chemical Industries Corporation, prioritize BSC for their import needs. The exclusive right to carry government cargoes helped the business grow.

Moreover, after the Russia-Ukraine war, the freight rates on international routes increased along with the appreciation of dollars, benefiting the BSC as it charged vessel fares in dollars.

The corporation earns from two major segments - freight revenue and service revenue. It also earns in the form of interest income from FDR, service charge from its Dhaka building, and dividends.

Meanwhile, following the latest earnings disclosure, the stock of BSC rose 1.12 per cent to Tk 90.2 per share on Wednesday on the Dhaka Stock Exchange.

The net operating cash flow per share increased to Tk 19.58 in the nine months through March this year from Tk 15.84 in the same period last year due to the sale of the oil takers.

However, the net asset value fell to Tk 98.49 per share as of March this year from Tk 101.97 in June last year due to the payment of government concessional loans.

Annual performance

The Shipping Corporation has maintained a steady annual growth in profit. It earned a profit of Tk 2.50 billion in FY24, the highest in its 53-year history.

The growth in the past few years has mainly been driven by higher freight charges on the international routes following the outbreak of the pandemic and the Russia-Ukraine war, as well as for the rising value of the dollar.

Six new ships to be purchased

Three months back, the Shipping Corporation announced that it will purchase six modern container ships from South Korea at a cost of $330.32 million.

The purchase of the ships is part of the government's plan to expand the scope of maritime trade and strengthen the country's position in the global shipping market.

If everything goes as planned, these vessels are expected to be added to BSC's fleet by 2027. "Adding new ships will expand our fleet and improve business performance further," said the BSC managing director.

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