Since the economy reopened in the middle of last year, 55% of publicly-listed firms have improved their profit margins – mainly because of their resilience and increased consumer spending, according to a recent corporate earnings compilation by the EBL Securities Research.
And, more encouragingly, at least 50% are earning more than what they did even before the pandemic.
The situation comes in stark contrast to that of last year when around two-thirds of the listed firms absorbed earnings deterioration amid lost sales, supply chain disruptions and depressed demand owing to the first wave of Covid-19.
Even though businesses survived the disruptions from a fresh surge in infections and subsequent restrictions, growing costs of businesses from soaring input prices will make their future recovery even harder, market forecasters say.
Both sales and profits recovered for most of the resilient businesses in 2021 even after the second wave had brought on some disruptions from time to time earlier this year.
In 2021, 55% of more than 300 listed companies posted year-on-year improvement in earnings till date.
Makers of hygiene products and drugs are still having higher profits though coronavirus infections slowed, dampening demands for specific over-the-counter drugs as well as sanitisers, masks and PPEs.
Construction material companies, processed food firms, textile and spinning factories are among the sectors that have rebounded from the first and second waves of Covid-19 since March last year, while some of them have exceeded their pre-pandemic profit levels and ventured on fresh investment for expansion.
Real estate firms and port operators returned to business, but the hospitality sector as a whole is still in the red.
"The resilience is really laudable. Half of the listed firms not only grew from their dented base of 2020, instead they surpassed their profits even in the pre-pandemic year," said Rehan Kabir, an analyst at the top-tier brokerage firm.
Unlike the shutdown in 2020, the prudent moderate lockdowns this year allowed some sales, while drop in interest and corporate tax expenses helped corporates recover their earnings in 2021.
"Nothing is free from challenges, as soon as consumers have proved their resilience, inflation now appears to be a fresh threat to their confidence, while the escalating costs for businesses owing to a hike in global commodity prices as well as the latest rise in local fuel prices is our concern as equity analysts," he said.
How all sectors fared
Since the beginning of the first wave of Covid-19, personal protective equipment (PPE) and hygiene products, ICT products and services have been in higher demand.
Beximco Ltd, a leading listed conglomerate, has been posting multifold profits since the first wave ended, as its PPE exports accompanied its increasing income from a wide range of its businesses, including textiles, IT, services.
Beximco Pharmaceuticals also enjoyed a big jump in profits this year as it bagged a decent profit from supplying imported Covid-19 vaccines to the government on top of their ever rising sales at home and abroad.
The pandemic blessed-sectors usually tend to fare better when virus infection surges as people buy their products more. But as long as the virus is yet to go away, demand for their products also remains above the average level.
Hygiene products multinational Reckitt Benckiser's Bangladesh market profit grew by one-fifth in the tough year of 2020, while a less disruption in operations this year helped its earnings grow 64% in the first nine months this year.
Now, the company is earning 53% more profits than what it was before the pandemic.
Pharmaceuticals and consumer essentials, in general, have their steady demand as always, with people needing these in any situation.
However, they also have to handle increased costs and try to grow sales during disruptions, which bites on profits unless the very company is efficient enough to overcome hurdles, said Asrarul Haque, another equity analyst.
Roughly half of the pharmaceutical companies suffered earnings deterioration in 2020 and some of the same set are still suffering.
Unlike the average ones with low resilience, efficiency, or corporate governance practices, the top-tier pharmaceutical companies keep growing their sales and profits.
Large drug makers, such as Square, Renata, Acme, and Orion either passed a flat profitability period during the fiscal year ending in June 2020 or there had been little declines.
But with the economic reopening, their profits began to grow to surpass pre-pandemic levels.
Olympic Industries, the biscuit market leader which was growing its profits in 2020, posted a 28% profit decline in the last quarter following a meagre 1% profit growth in the last fiscal year. Raw material cost hike was the main reason behind that.
Textile and apparel industry fell into big trouble during the first wave of the pandemic amid order cancellations, pressures to pay workers, and stimulus support helped them stay afloat initially.
Later last year, as soon as foreign buyers rushed with orders to Bangladeshi apparel factories amid no better option, the industry got its ground to keep running.
Cotton price hike amid a higher demand for yarns helped the spinners bag their highest-in-years profits as they were successful in increasing their prices even more than their escalated costs.
Profits of all the listed spinning mills, except the ones with internal problems, jumped several times in 2021.
On the other hand, the textile companies paying more than double the price for yarns suffer profit deterioration unless they successfully bargain with their buyers.
Quality apparel exporters are getting better prices from their global buyers and are making decent profits.
Around one-third of the listed textile companies are earning more than their pre-pandemic levels, mostly the spinners.
Two-thirds of the listed textile sector firms are still making less profits than in the past two years.
However, some are gradually coming out of their loss-making trajectory.
Construction materials that include cement, steel rods, tiles, and paints drastically suffered drops in sales and profits during the first wave of Covid-19.
They rebounded with the economy's reopening as construction at every level – megaprojects, private commercial construction and individual homebuilding – kept their pace.
Now, they parted their ways depending on how much they can increase their product prices in line with the still escalating costs for raw materials, maritime freight, and inland transportation.
Cement companies are selling more, but they are experiencing a profit squeeze as a hike in product prices is not adequate to offset rising costs.
A long persistent topline war in the cement industry with overcapacity seemed to have eased in October-March that helped listed cement mills secure a jump in their 2020-21 profits.
But in the July-September quarter's profits dropped for all except LafargeHolcim and Crown Cement.
Bangladesh Cement Manufacturers Association's Vice-President Md Shahidullah fears that the recent diesel price hike will further take away from the companies' bottom line amid no sign of raw material cost to come down immediately.
Steel industry, however, managed to increase prices against their escalated costs in 2021 and companies, such as BSRM, GPH Ispat are posting record profits.
Unlike cement, a balance between the steel industry's capacity and market demand helped the price hike.
Multinational Berger Paints Bangladesh, absorbing some dents in sales and profits in the shutdown in 2020, is now posting higher growth, thanks to its edge in market leadership.
No listed ceramic company except RAK surpassed their pre-pandemic earnings.
The lost revenue in the pandemic situation put each of the four listed hotel operators in a tight spot.
With increased guest arrival, they witnessed some improvement in earnings but mostly lacked consistency, while none of them are earning more than their pre-pandemic levels.
Overcoming the lost revenues during the 2020 shutdown, port operators Saif Powertec, Summit Alliance are earning more than pre-pandemic levels.
Also, real estate company Eastern Housing and Hospital operator Samorita's earnings are higher than those of pre-Covid times.
Since the beginning of the pandemic, leather and footwear companies began facing profits deterioration as fewer pairs of shoes were going off the shelves, when people were moving less, schools remained shut.
Companies often had to offer discounts to clear their stocks.
Local footwear market leader Bata Shoe Bangladesh posted sixth consecutive losses at the end of September.
However, as schools reopened and life returned to normalcy, shoes are selling more and are helping the companies turn around.
Apex Footwear, the second largest local market player and a leading exporter of leather shoes, registered a jump in earnings in the fiscal 2020-21 and a moderate profit growth in the last quarter.
Synthetic footwear exporter Fortune Shoes also is posting jumps.
Leather processors Apex Tannery and Smamta Leather are coming out of their losses made during the peaks of the pandemic.
But none of them are earning more than their pre-pandemic levels.
Apart from the sick ones, banks, non-bank financial institutions, and general insurance companies have been posting higher profits since the pandemic began.
Analyst Asrarul Haque mostly thanked the central bank relaxation to defer the irregular loans in pandemic situations that helped lenders provision less, get higher income from the stock market, which mostly brought back some provision amounts to profit accounts.
Rehan Kabir said in 2020, many banks had to bear their previous expensive deposits following the 9% and 6% caps earlier that year. The cost came down this year for most banks that helped them secure a better spread.
Insurers are also earning more nowadays following the regulator's firmness against irresponsible commission expenses to acquire business, and increased income from capital market investments.