Envoy Textiles Limited and Matin Spinning Mills PLC, which are among the largest textile companies in Bangladesh, saw their profits surge in the first half of fiscal year (FY) 2024-25 as both logged higher sales.

Besides, they achieved this feat despite higher connectivity costs, supply chain disruptions and production setbacks amid widespread unrest in July and August, when a mass uprising ousted the Awami League government led by Sheikh Hasina.

Envoy Textiles registered sales growth of 30 percent year-on-year in the July-December period of the current fiscal, driving its profits up 134 percent compared to its value the previous year.

As a result, the company secured profits of Tk 68 crore from sales revenue of Tk 898 crore in the first six months of FY25.

Similarly, sales of Matin Spinning grew about 17 percent year-on-year to Tk 445 crore, with the company's bottom line more than tripling to Tk 25 crore in the July-December period.

"Both companies are export-based and have significant [production] volumes, allowing them to absorb various economic fluctuations as demonstrated during this period," said a research analyst from a leading brokerage house.

But based on an analysis of the recent financial disclosures issued by listed companies, he noted that this trend is not consistent across all businesses.

The financial statements of these two companies indicate that their performance in the second quarter was better than that in the first as all local businesses faced supply chain disruptions during the student-led mass uprising.

"In July and August, the internet shutdown and roadblocks that lasted a couple of weeks adversely impacted businesses in the country," the stock analyst said.

However, export earnings rebounded in the second quarter, positively impacting the profits of Envoy Textiles and Matin Spinning, he added.

The country's export earnings increased by 12.84 percent year-on-year to $24.53 billion in the first half of FY25 thanks to increased shipments of garment products.

In December 2024 alone, the export earnings rose 17.72 percent year-on-year to $4.63 billion, according to the Export Promotion Bureau.

In its financial statement, Envoy Textiles attributed higher sales revenue for the hike in profits.

Meanwhile, Matin Spinning said its heightened sales revenue in the July-December period was mainly due to a rise in average selling prices and sales growth.

The company's sales volume edged up to 10,100 tonnes from 9,559 tonnes over the six-month period, with its average selling price for yarn increasing to $3.68 from $3.64 per kilogramme.

Both companies also saw sales costs, which are primarily raw material expenses, fall to 84 percent from 93 percent of their total revenue from the previous fiscal, positively impacting profits.

However, the two faced rising operating costs due to higher wages while their finance costs also grew because of higher interest rates on bank borrowing.

The central bank is limiting the money supply in order to reduce inflationary pressure, making financing more expensive for firms. Over the first six months of FY25, interest rates in the banking sector were hiked by approximately 500 basis points.

The net interest costs for Envoy Textiles rose by 51 percent year-on-year to Tk 71 crore while that of Matin Spinning increased by 38 percent year-on-year to Tk 18 crore.