Bangladesh Textile Firms Face Low Profits and Sales
Listed textile and garment makers in Bangladesh are facing low profits and sales due to the ongoing COVID-19 pandemic. However, spinners and yarn makers are performing well by taking advantage of the price hike of yarn.
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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