6 months ago

Kohinoor Chemical on growth path, while peers take a blow

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Kohinoor Chemical stands out among its peers, with a 19 per cent year-on-year profit growth in FY23 driven by sales of finished goods of its well-known brands of soaps, cosmetics, and toiletries.

On the other hand, five other companies that supply chemicals to local manufacturers saw their profits decline or losses swell in FY23, compared to the previous fiscal year, for issues, such as costlier raw materials, the stronger dollar, and energy price hikes, which have been wreaking havoc on the overall economy.

The partial or permanent closure of small and medium enterprises (SMEs) that had been relying on raw materials from these chemical manufacturers added to the distress. Economic turmoil unleashed by the Russia-Ukraine war has dealt a severe blow to those SMEs.

While the gas and power supply disruption has curtailed production of the chemical companies, it hampered the operations of the SMEs as well, reducing the demand for chemicals.

Against the backdrop, higher sales and selling prices of soaps, cosmetics and toiletries helped Kohinoor earn a profit of Tk 377 million in FY23.

Although the cosmetics manufacturer has yet to disclose the annual sales figure, its nine-month sales grew 15 per cent year-on-year to Tk 4.02 billion until March this year.

Market operators say Kohinoor has escaped the economic storm riding on popularity of its products among the middle-class and rural people of the country. Most of the products of Kohinoor carry the brand name of Tibet. Other brands of the company are Sandalina, Ice Cool, Fast Wash, and Bactrol.

Kohinoor's growth continued into the first quarter through September of FY24, with a 22 per cent higher profit year-on-year to Tk 99.80 million.

Profits of Salvo Chemicals and Wata Chemicals dropped in FY23, compared to FY22, while losses of Global Heavy Chemicals and Far Chemical more than doubled year-on-year in FY23.

Active Fine Chemicals is yet to publish annual earnings data, but its nine-month profit slid 50 per cent year-on-year to Tk 29 million though March this year.

Industry insiders say that the companies have been met with challenges in opening letters of credit (LCs) for import of raw materials amid the dollar crunch, which further slowed down production. The prices of raw materials at both home and abroad went up amid the dollar crisis.

The rising expenditures drove up the production cost, squeezing the profit margin.

Raw material prices eased a bit in the recent months, but imports remained restricted.

An unhealthy competition created by abusive use of the bonded warehouse facility also ruins the business of domestic chemical producers. A number of large exporters import raw and packaging materials without paying any duty taking advantage of the facility and sell chemicals in the local market at comparatively low prices.

Wata Chemicals, a producer and seller of a variety of acids, witnessed a 25 per cent year-on-year plunge in profit in FY23.

Company secretary Shamsul Huq said that higher sales could not offset additional production cost and so profit was down. The company's sales revenue rose 6 per cent to Tk 1.01 billion in FY23, while the cost of production jumped 8 per cent to Tk 727 million.

Salvo Chemical Industry, which produces sulphuric acid, sulphate, battery-grade water and glucose, has reported a 25 per cent year-on-year drop in profit in FY23.

Company secretary Liton Kumar Roy said profit had plummeted due to high input costs.

Moreover, currency devaluation and an increase in energy prices adversely affected overall profitability of the company, he added.

However, Salvo Chemical's profit rose 17 per cent year-on-year to Tk 48 million in July-September this year for higher sales revenue.

The losses of Global Heavy Chemicals - a manufacturer and distributor of sodium hydroxide (caustic soda), chlorine, and other chemical products - more than doubled to Tk 415 million in FY23.

An official wishing not to be named said sales had fallen as the company could not run operations properly due to gas crisis.

Far Chemical Industries, which produces textile dyeing chemicals, also saw losses double to Tk 171 million in FY23.

It had remained shut for long. The company's factory was shifted from Cumilla EPZ to its own site in Rupganj in June last year. The production unit could not resume operations fully after the transfer, said an official of the company, requesting for anonymity.

Besides, Far Chemical, which recently merged with non-listed S.F. Textile Industries, could not open LCs to import necessary machinery due to the dollar dearth.

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