Bangladesh's economy has been facing tough times of late as sustained high inflation, hike in interest rates and massive devaluation of the local currency continue to plague the country. In this series, we take a look back at how various industries fared amid the crisis in fiscal year 2022-23. Here, in the fourth instalment of the series, we placed listed export-oriented garment makers under the scanner.

Although the taka, the local currency, was devalued by more than 16 percent against the US dollar in fiscal 2022-23, the profits of listed export-oriented garment makers in Bangladesh saw a huge drop for higher costs.

Currency devaluation usually makes a country's exports more competitive as its products become cheaper in the global market, thereby increasing the scope to profit from higher sales.

But of the 29 listed apparel companies that published their financial reports for the previous fiscal year (FY), 13 logged lower profits and five incurred losses for the first time while the rest performed well.

As such, their combined profits fell 49.8 percent to Tk 322 crore that year, mainly due to higher energy and financing costs, according to industry people.

"To my knowledge, around 80 percent of the non-listed garment makers are incurring losses," said Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association.

Meanwhile, 10 percent are breaking-even and the remaining 10 percent are making profit, he added.

Against this backdrop, Hatem said the listed companies that logged profits in FY23 were lucky to have secured higher revenue considering the massive spike in production costs.

He explained that the benefit of the taka's devaluation was superseded by higher energy prices coupled with a shortage of natural gas.

Between June 2022 and July 2023, the local currency was devalued by 16.12 percent to Tk 109 per US dollar, showed data of Bangladesh Bank.

Electricity prices rose by 5 percent three times, resulting in a compound increase of around 15.7 percent at the same time. Similarly, the price of diesel grew 37 percent and furnace oil 41.4 percent.

Likewise, the retail price of gas for industries was hiked by 150 to 178 percent in the previous fiscal.

Hatem also informed that export orders for the apparel industry actually decreased in FY23 even though the Export Promotion Bureau (EPB) is showing increased shipments.

As per EPB data, apparel exports rose by 10 percent to $46.99 billion in the last fiscal year.

"The EPB data is not correct. I have been saying for years that it exaggerates the export data," said Hatem, who is also managing director of MB Knit Fashion Ltd.

According to the financial reports of listed apparel companies, their sales increased 3 percent to Tk 11,955 crore in FY23 while the sales growth was above 14 percent the year prior.

Citing how export demand has dropped while the gas crisis is at its peak, Hatem said the situation will not likely improve in the current fiscal year.

Aman Cotton Fibrous, Maksons Spinning Mills, Rahim Textile Mills, Malek Spinning Mills and Safko Spinning Mills all fell into losses in FY23 despite having registered profits in fiscal 2021-22.

Among the listed apparel makers, Malek Spinning Mills leapfrogged Square Textiles to take top spot in terms of sales.

But while the company's turnover rose 4 percent to Tk 1,742 crore, it incurred losses of Tk 22 crore in face of higher production costs. Malek Spinning had logged profits of Tk 86 crore the previous year.

Meanwhile, the turnover of Square Textiles dropped 5.33 percent to Tk 1,650 crore and its profits fell 41 percent to Tk 114 crore.

In their financial reports, the listed garment makers all cited higher production costs and lower export orders for reducing profits.