SS Steel sees profit decline despite revenue growth in March quarter

SS Steel Limited witnessed a 5% decline in its profit for the third quarter of the ongoing fiscal despite posting an 11% growth in revenue.

Although its revenue grew because of increased demand for steel, the hike in raw materials and freight costs bit into the company's profit, SS Steel mentioned in its financial statements.

The company published its financials for the January to March quarter of the fiscal 2021-22 on the Dhaka Stock Exchange (DSE) website on Wednesday.

According to the disclosure, the MS rod manufacturer's consolidated revenue stood at Tk194 crore during the quarter, which was Tk175 crore a year ago.

Its consolidated profit stood at Tk20 crore, which was Tk21 crore in the third quarter of the previous fiscal.

The company's DSE share price fell 1.2% to Tk17 per share on Wednesday. Its share price has been low for the last seven months.

In the July to March period of the ongoing fiscal, its consolidated revenue stood at Tk513 crore and net profit at Tk65 crore.

SS Steel crossed the revenue threshold of Tk500 crore in nine months for the first time thanks to the income from its subsidiaries.

In 2020, SS Steel acquired 99% shares worth Tk160 crore of Saleh Steel.

Saleh Steel produces and sells rods and coils, and its annual production capacity is around 84,000 tonnes.

In January 2021, SS Steel decided to acquire a 75% share of Southeast Union Ceramics Industry Limited – a coal-based China-Bangladesh joint venture ceramic manufacturer – for Tk200 crore.

The shareholders of the steel company have also approved the acquisition proposal in an extraordinary general meeting.

In April this year, SS Steel decided to invest in Al-Falah Steel and Re-rolling Mills Limited by acquiring 99% of its shares worth Tk87.46 crore.

After that, the company will further invest Tk96.68 crore in Al-Falah Steel as a share money deposit. Al-Falah Steel will issue new shares to SS Steel for this investment.

SS Steel expects that this investment will add around Tk450 crore turnover to Al-Falah Steel annually and substantially increase the company's profitability.

SS Steel will finance the investment from its retained earnings and bank loans.

The company got listed on the capital market in 2019 and its paid-up capital is Tk328 crore.

In a board meeting on 24 November 2021, it declared a 2% cash dividend only for general shareholders and an 8% stock dividend for all in FY21.