2 months ago

Salvo Chemical's net profit drops 26pc in H1

Sales revenue up 23pc

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Salvo Chemical Industry, which produces sulphuric acid, sulphate, battery-grade water and glucose, has reported a 26 per cent year-on-year drop in net profit for the six months through December 2022 due mainly to costlier raw materials.

The chemical producer logged a net profit of Tk 64.66 million in July-December 2022 as against Tk 87.56 million in the same period of the last fiscal year, according to its un-audited financial report published on Thursday.

As a result, the earnings per share (EPS) stood at Tk 0.99 for the six months through December 2022, down from Tk 1.35 for the same period a year before.

High prices of local and imported raw materials, currency devaluation and increase in energy prices have adversely affected the overall profitability of the company, said the company in a disclosure.

The company's sales revenue, however, rose 23 per cent year on year to Tk 763 million in July-December 2022. But the costs of goods sold soared 34 per cent to Tk 601 million during the period under review.

The sales revenue has increased due mainly to increase in sales from the company's new starch unit and its by-product sales, said the company.

The company set up a corn starch unit in 2021 which started commercial operation in May 2022.

Corn starch is a multipurpose powder that is used in food processing, pharmaceutical, paper and even textile sectors. It is also a popular cooking ingredient for soups, stews, sauces and custards and is also used to starch clothing to keep them crisp and wrinkle-free.

Established in 2003, the company's share has remained stuck at the floor price level at Tk 61.80 since August last year although it tried to break the floor in mid-December.

The company's net operating cash flow per share also dropped to Tk 1.17 for July-December 2022 from Tk 2.26 in the same period of last fiscal year due to increased cash payment to suppliers and higher operating expenses.

In FY'22, the company disbursed a 10 per cent cash dividend as its annual profit jumped 468 per cent year on year to Tk 129 million. In FY21, it provided only a 2 per cent cash dividend.

Majority of the listed chemicals producers also faced their profit drop in the first half of the ongoing financial year due to the strong dollar and costlier raw materials.

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