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Bangladesh Textile Firms Face Low Profits and Sales

May 25, 2021
Bangladesh Textile Firms Face Low Profits and Sales

Dhaka, Bangladesh

Listed textile and garment makers in Bangladesh are facing low profits and sales due to the ongoing COVID-19 pandemic. Data from the Dhaka Stock Exchange (DSE) showed that out of the 26 listed RMG, textile and spinning companies, 16 underwent a drop in earnings whereas 10 manufacturers reported a fall in profits.

The pandemic reduced the worldwide consumption of clothes leading to a fall in exports. According to the Export Promotion Bureau, Bangladesh earned $23.48 billion from apparel shipments during July 2020 and March 2021 which was 2.55% lower than the previous year.

The RMG and textile sector was adversely impacted due to the higher price of yarn.

However, the spinners and yarn makers performed well taking full advantage of the price hike of yarn and saw good profits. Spinners listed at DSE registered higher profits from July 2020 to March 2021. Of the six listed spinners, four witnessed higher profits while two made a profit on incurring losses previously.

Bangladesh is mainly dependent on China and India for cotton and other raw materials. Data from Bangladesh Textiles Mills Association (BTMA) shows that cotton prices increased from $0.60 to $0.85 per kg in December 2020 and stayed between $0.95 and $1.7 in March 2021. This was because of closing of the Chinese market due to the pandemic and increase in India’s cotton price. The spinning mills credited the rise in cotton prices to a surge in demand for the item.

The spinning mills and companies with stocks of cotton generated good profits while others will slowly recover.

Source – The Daily Star

Image Source: Unsplash 

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