Apex Footwear makes record sales in FY23 on stronger footing at home and abroad

Apex Footwear witnessed record sales and sales growth in FY23, thanks to increased export and domestic sales.

The country's leading shoemaker's export soared more than 35 per cent year-on-year to Tk 7.14 billion while domestic sales jumped 22.25 per cent to Tk 9.40 billion in FY23, compared to the previous fiscal year.

The aggregate sales revenue rose 27.45 per cent year-on-year to Tk 16.54 billion in the year.

The revenue growth led to a 21 per cent year-on-year surge in profit to Tk 167.14 million for the year ended in June this year.

Following Wednesday's earnings disclosure, the stock rose nearly 4 per cent to close at Tk 307.90 on the Dhaka Stock Exchange.

The reason why the company recorded higher sales in the domestic market was that the year saw three Eid festivals, which was an exception, said Dilip Kajuri, deputy managing director and chief financial officer of Apex Footwear.

At the same time, currency devaluation led to a boom in export revenue. "We were able to increase our export to Japan and also hiked prices of some products."

Profit, however, did not go up as the revenue, said Mr Kajuri.

"Profit would have been much higher had the cost of goods sold not increased."

The cost of goods sold spiked 3 per cent year-on-year due to the weakening of local currency against the US dollar.

While the dollar becoming stronger against the taka boosted export revenue, it hit hard local business with inflation and utility bills rising while there was a scarcity of energy supply.

"We were unable to increase prices for the local market because of the high inflationary pressure."

Moreover, higher export tax had a negative impact on profit from overseas sales, said Mr Kajuri.

Last year, source tax on export was doubled to 1 per cent, compared to the year before.

Apex is the largest shoemaker in South Asia, accounting for approximately 15 per cent of leather footwear exports from Bangladesh.

It exports footwear to all major markets in Europe, North America, and Japan.

The board of directors of Apex Footwear recommended 35 per cent cash dividend and 10 per cent stock dividend for shareholders for FY23.

The company called an annual general meeting on November 28 for final approval of the dividends to be held on a virtual platform.

The company said stock dividend had been recommended in order to utilise its retained earnings as paid-up capital for improving capital adequacy.

It added that stock dividend would not be given out of capital reserve or revaluation reserve.

The company's net operating cash flow per share dropped slightly to Tk 27.23, from Tk 29.94 in the previous fiscal year mainly due to an increase in income tax payment by Tk 91.84 million.

However, the net asset value rose to Tk 239.64 for FY23 from Tk 229.96 a year ago on an increase in non-current assets and a decline in non-current liabilities.

Alongside its own brands, the company's local segment has also been outsourcing and selling footwear and accessories of different foreign brands, such as Venturini, Nino Rossi, and Moochi. The company sells clothing products as well.

Apex has continued to focus on product diversification that is expected to drive sales growth further in future.

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