Paramount Textile's profit plunged 24 per cent year-on-year to Tk 191 million in the first quarter of FY25, due to the closure of its associate company and higher finance costs.
Paramount Textile's associate company -- Paramount Btrac Energy, a 200 megawatt HSD (High-Speed Diesel) power plant, shut down in February this year as the power purchase agreement with the government expired. Paramount Textile had a 49 per cent stake in Paramount Btrac Energy.
Subsequently, consolidated earnings per share (EPS) fell to Tk 1.07 for July-September this year from Tk 1.34 in the same quarter of the year before, according to a stock exchange filing on Wednesday.
Following the news, the stock fell 2.12 per cent to close at Tk 46.2 per share on Wednesday on the Dhaka Stock Exchange.
Paramount Textile, a sister concern of Paramount Group, however, reported a 32 per cent year-on-year growth in revenue to Tk 3 billion for the latest quarter.
A yarn & solid dyeing unit became operational in October last year, the reason behind the higher revenue in Q1 of FY25, said the company in its earnings note.
Paramount Textile produces and supplies woven fabrics with more than 85 percent of its total income coming from yarn-dyed fabrics.
Its revenue from knit yarn also jumped more than 200 per cent year-on-year to Tk 170 million in the first quarter through September.
However, the closure of its associate company and increased finance costs impacted the bottom-line growth, according to the company.
The finance costs escalated 26 per cent year-on-year to Tk 298 million in July-September this year, driven by soaring interest rates in the banking sector.
Interest rate has been in an upward momentum since the government removed the ceiling on lending rate in July last year. The rate further rose when the government stopped controlling it and left it to the market in May this year.
The financial sector returned to a market-driven interest rate regime after four years at the prescription of the International Monetary Fund (IMF) in order to step up its fight against inflation.
As a result, finance expenses of the listed companies with higher debt volumes grew proportionately with rising interest rates.
Paramount Textile's long-term debts amounted to Tk 16.73 billion while short-term borrowings Tk 6.93 billion as of September this year, according to its financial statements.
The net operating cash flow per share, a measure of a company's ability to generate cash from its operations, rose to Tk 1.67 per share from Tk 1.35 a year ago.
This improvement was driven by a subsidiary's trong cash generation and lower operating expenses relative to revenue, according to the disclosure.
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