Shipping Corporation rises on DSE, defying 26pc profit decline in Q2

The Bangladesh Shipping Corporation (BSC) saw its profit erode by 26 per cent year-on-year to Tk 502 million in the second quarter through December, FY24, owing to a decline in vessel fare internationally coupled with higher finance expenses.
Subsequently, the earnings per share went down to Tk 3.29 for the October-December quarter from Tk 4.43 for the same quarter a year ago, according to a stock exchange filing on Tuesday.
Despite reporting a lower profit, the company saw its stock price rise by 2.31 per cent on the Dhaka Stock Exchange to close at Tk 123.8 per share on Tuesday.
The stock had never been stuck on the floor.
The state-run oceangoing vessel authority's half-yearly profit also fell 22 per cent year-on-year to Tk 1 billion for the July-December period.
Freight charges have dropped 50-70 per cent globally from the recent peak, according to the Shipping Agents' Association. The shrinking demand for goods as well as the shortage of the greenback hampered the business further.
Commodore Md Ziaul Hoque, managing director of the company, said revenue earnings from major segments had decreased mainly due to a sharp fall in vessel fare on international routes.
"A fall in global shipping fares and vessel maintenance cost slowed down the profit growth." Otherwise, earnings would have been much higher, Mr Hoque said.
The Shipping Corporation's freight revenue dropped about 14 per cent year-on-year to Tk 951 million in the October-December quarter, while half-yearly revenue fell 8.60 per cent to Tk 1.91 billion.
During the period, two ships were taken to rest on a dry platform for maintenance, a procedure called dry-dock, which is carried out every five years, another reason for the low revenue.
Moreover, the rising interest on loans that the Corporation had taken to purchase ships drove up the finance cost.
The Shipping Corporation's long-term loans were worth Tk 15.66 billion as of December 2023, including credits from Japan, China, and the Bangladesh government.
The finance expenses soared 144 per cent year-on-year to Tk 188 million in the October-December quarter.
The Corporation maintained a steady annual income growth for the three financial years to FY23, with a record profit of Tk 2.46 billion in FY23.
Based on the profit, it declared a 25 per cent cash dividend for FY23, the highest in its history.
The state-owned autonomous corporation owns eight ships and oil tankers and sea-going vessels to carry export items, such as garments, and imported products, such as grain and crude oil.
Aiming to enhance its transportation capacity, the Corporation has taken measures to add as many as 21 more ships to its fleet with foreign loans.
The purchase of these ships is part of the government's plan to turn the BSC a self-dependent shipping firm.
The BSC managing director said the Corporation had recently signed a contract with a Chinese supplier -- China National Machinery Import and Export Corporation -- that would build four large ships.
The BSC started its journey with only two ships in 1972 and listed in the stock market in 1977. It owned only two ships until 2018 before the inclusion of six vessels to its fleet.
Meanwhile, the shipping ministry issued the Bangladesh Flag Vessel (protection of interests) rule in February 2023, incorporating a provision that the Corporation will handle waterway shipment of all state imports of fertilizer, crude oil, food items, and motor vehicles.

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