Covid-19 pulls companies down to losses

The global outbreak of Covid-19 has dealt a devastating blow to businesses and caused economic stagnation.

The private sector in Bangladesh has been left reeling from the impact of the 66-day nationwide shutdown from 26 March 2020.

Amid restrictions on movement imposed to contain the spread of the novel coronavirus, production was halted due to a lack of raw materials, sales dropped and, finally, companies' revenue and profit fell. This led companies to incur losses.

Even though the pandemic situation has improved slightly and entrepreneurs from different sectors are trying to run their businesses in full-scale, the overall situation is not normal yet.

Amid the pandemic, companies saw their revenues and sales drop but their fixed costs remained the same as before. For this reason, 20 listed companies that drew profit previously have suffered losses.

As companies incurred losses, they failed to pay any dividend for their shareholders, leaving a negative impact on their share prices.

Among over 300 companies listed on the stock exchange, The Business Standard has analysed 224 companies' financial statements, whose financial year ended on 30 June 2020.

As per data, about 53 listed companies from different sectors except financial sector fell into losses in the 2019-2020 financial year.

In FY2018-2019, the number of loss-making companies was 33 or 15% of 224 total listed companies.

Now in the stock market, about 24% of the 224 companies are loss-making entities.

These companies are from engineering, food and allied products, fuel and power, jute, textile, pharmaceuticals and chemicals, paper and printing, cement, tannery, ceramic, travel and leisure and miscellaneous sectors. 

Covid-19 bites on profit, lead to losses

Electric bulb producer, Bangladesh Lamps Limited has incurred a big loss of Tk9.25 crore in FY2019-20 after five years. In the previous year, the company made a profit of Tk2.93 crore.

In 10 years from 2010 to 2019, the last time the company suffered losses was in 2013.

Mohammad Ruhan Mia, company secretary of Bangladesh Lamps, told The Business Standard the company has fallen into losses due to the pandemic.

Meanwhile, shrimp exporter Gemini Sea Food Limited made losses last year as exports fell amid the Covid-19 situation.

At the end of the year, the company suffered a loss of Tk4.61 crore. As a result, the company did not pay any dividend to the shareholders.

The company said its business has been affected due to ongoing pandemic and tropical cyclone Amphan.

In the travel and leisure sector, three out of five listed companies fell into losses in FY2019-20.

Bangladesh Services Ltd and United Airways (BD) Limited have been making losses for several years. Sea Pearl Beach Resort and Spa Limited is the new addition to the list.

Julhas Biswas, chief financial officer (CFO) of Sea Pearl Beach Resort, said, "There were few guests during the shutdown for which the income was almost zero."

There was no loss-making company in the energy and power sector in FY2018-19, but one year later, two companies from this sector – CVO Petrochemical Refinery and Bangladesh Welding Electrodes – reported losses.

Among the companies that made losses last year, one is from the jute sector, six from engineering, five from food and allied, two from fuel and power, 21 from textile, four from pharmaceuticals and chemicals, one from paper and printing, two from cement, two from tannery, one from ceramic, three from travel and leisure and four companies were from the miscellaneous sector. 

Hardest hit textile sector

As per DSE data, the highest number of loss-making companies is from the textile sector.

As Covid-19 highly impacted the RMG sector, its backward linkage textile sector was on the top of loss-making entities last year.

In FY2018-19, 11 out of 56 companies in the sector saw losses but the number rose to 21 companies a year later.

No loss-making entities in three sectors

All of the 16 companies from service and real estate, IT, and telecommunication sectors made profit in FY2019-20 despite the pandemic.

Even though the service and real estate sector faced a bad situation during the pandemic, none of the four listed companies in this sector faced losses amid the pandemic.

As reliance on the internet increased during the pandemic, internet service providers and IT-based companies made a good profit last year. None of the 10 companies from the IT sector faced losses in the year.

Meanwhile, both of the two listed companies from the telecommunication sector – Grameenphone and Bangladesh Submarine Cable Company Limited – earned profit amid the pandemic. Recently, Robi Axiata Limited got listed on the stock market.