Sonali Paper & Board Mills returned to profit in the second quarter (Q2) through December 2024 of the current fiscal year, supported by higher revenue and a reduction in finance costs.
The paper manufacturing company earned a profit of Tk 122.6 million in October-December last year, whereas it suffered a loss of Tk 5.68 million in the same quarter of the previous year.
Consequently, earnings per share (EPS) stood at Tk 3.72 for the quarter, recovering from Tk 0.17 in the negative for the same quarter a year ago.
During the period, the company's sales revenue escalated 15 per cent year-on-year to Tk 961 million.
Following the earnings disclosure, the stock soared almost 10 per cent to Tk 150.8 per share on Monday on the Dhaka Stock Exchange, as investors showed buying appetite in anticipation of quick gains.
Company secretary Md Rashedul Hossain said higher revenue from core business coupled with lower finance costs had helped the company secure a healthy profit.
The paper manufacturer cleared long-term loans of Tk 124.8 million during the quarter, according to its audited financial statements published on Monday, which brought down finance costs by 2 per cent to Tk 23.55 million.
Moreover, a reduction in unrealized losses from stock market investments and higher income from fixed deposits boosted profit, said the company secretary.
As some stocks recovered in terms of value, Sonali Paper's unrealized losses fell to Tk 3.79 million in the second quarter through December last year from Tk 54 million in the same quarter of the previous year, according to the latest financial statement.
The value of an investment, such as a stock or a security, which the investor has not yet sold off, is considered an unrealised loss or profit.
Sonali Paper has a significant investment in the stock market beyond its core paper business and used to register higher profits from equity investment earlier compared to its core business.
Its short-term investment in fixed deposits also reached Tk 243.6 million as of December last year from Tk 71.23 million in June last year.
Its half-yearly profit grew 1.45 per cent year-on-year to Tk 1.80.6 million through December last year while revenue saw a 1 per cent growth to Tk 1.53 billion during the period.
The net operating cash flow per share, a measure of a company's ability to generate cash from its operations, dropped to Tk 10.94 per share in H1 FY25, from Tk 12.17 a year ago, as the company purchased more raw materials.
The net asset value, which refers to the excess of total assets over total liabilities, reached Tk 166.21 per share as of December last year, up from Tk 164.73 per share in December 2023.
Sonali Paper started investing in the stock market in 2021 when educational institutions had been shut down, squeezing the paper business, due to the pandemic.
There was no stock market investment by the company until March 2021. Between April and December 2021, it invested Tk 450 million in equity-based securities.
Sonali Paper, a concern of Younus Group, produces white and printing papers, simplex papers and duplex papers. In August 2024, it started producing aluminium foil paper boxes from a new product line.
Aluminium foil containers are used in family banquets and in the packaging of food items, such as airline snacks and western-style pastry baking, in shapes and sizes preferred by customers.
In January last year, the company added a new product line -- Aluminum House foil, which also had a significant impact on its competitive position in the market and helped increase revenue.
Sonali Paper was incorporated in 1977 and got listed on the Dhaka Stock Exchange in 1985 and on the Chittagong Stock Exchange in 1996.
Younus Group took over the company, buying all shares in 2006.
Under the previous management, the company had incurred huge losses and failed to hold general meetings and make public financial statements between 1998 and 2006.
The prime bourse then transferred the company to the over-the-counter (OTC) market in October 2009. Sonali Paper came back to the main market of the stock exchanges and started trading on July 1, 2020.
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