Following a string of record sales and profits in recent quarters, the rising prices of raw materials and working capital finance have begun to eat into BSRM profitability. Despite considerable topline growth, both the public companies of the country’s top steel group – BSRM Limited and BSRM Steels – reported year-on-year profit reductions for the January-March quarter.
Since the end of 2020, when raw material costs were skyrocketing and steel mills, particularly big brands like BSRM, were able to pass the cost savings on to constructors amid strong demand for MS rods, BSRM companies have seen significant increases in revenue and profits. The improvement in net earnings was aided by lower net finance costs and a lower corporate tax rate.
The newest financial accounts, which were released on Monday, show that BSRM was able to maintain sufficient sales to generate more revenue, albeit at the loss of profits to some extent. Sales at BSRM Steels increased to Tk2,153 crore in the January-March quarter, up from Tk1,663 crore a year ago rising by more than 29 per cent. However, its gross profit margin, which measures how much of a company’s revenue is saved after factory-level costs of goods sold, fell to 8.82 per cent from 15.94 per cent a year before.
Because of the significant profits in the first half of the fiscal year, the company’s nine-month EPS has increased year over year to Tk12.01 from Tk10.93. Meanwhile, BSRM Ltd reported a third-quarter sales of Tk2,371 crore, up from Tk1,872 crore a year ago, while maintaining its gross profit margin and net profit after taxes. According to the managing director, the merger with the subsidiary enabled BSRM Ltd to maintain greater profitability this year.
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