Written by The Banking Post
A sharp rise in fuel prices is set to ripple through the corporate sector, raising costs for businesses and clouding earnings outlook across industries.
The government has raised diesel by Tk 15 per litre, octane by Tk 20, petrol by Tk 19 and kerosene by Tk 18—pushing energy costs to record highs. The move is expected to lift production, transport and distribution expenses, forcing companies to either absorb the shock or pass it on to consumers.
Analysts say the immediate impact will be higher inflation and weaker purchasing power. “This could translate into slower earnings growth for many listed firms and cautious investor sentiment,” said a market analyst.
Sectors heavily dependent on fuel are likely to feel the strain first. The automobile industry, including companies like IFAD Autos and Runner Automobiles, may face slower demand as higher fuel costs reduce mobility and raise operating expenses.
“The sales of fuel-run automobiles have already declined,” said an industry leader, adding that recovery depends on stabilisation of fuel prices.
The cement sector is also vulnerable. Firms such as Crown Cement, Heidelberg Materials Bangladesh and Premier Cement Mills rely heavily on fuel for production and transport. Rising costs could erode margins unless prices are adjusted.
Export-oriented textiles and garments face a dual hit from higher energy and logistics costs. Companies like Envoy Textiles and Far East Knitting and Dyeing Industries may struggle to pass on increased costs to global buyers.
“If the fuel crisis persists, production costs will rise and profits will erode,” said a company executive, noting heavy reliance on diesel for operations.
Consumer goods companies are also under pressure. Firms such as British American Tobacco Bangladesh and Unilever Consumer Care Bangladesh may attempt price adjustments, but higher inflation could dampen demand, especially in rural markets.
Exporters are already feeling the pinch. A leading food manufacturer said shipping costs to Gulf markets have surged sharply, while domestic distribution has slowed due to reduced transport activity. “The bottom line will face a decline due to the ongoing fuel crisis,” he said.
Despite the broad pressure, some sectors may hold up better. Banks could remain relatively stable by shifting funds into government securities, while certain power producers operating under cost-plus contracts may pass on higher fuel costs.
State-run fuel and lubricant companies such as Padma Oil Company, Meghna Petroleum and Eastern Lubricants Blenders may see short-term gains from higher prices and inventory valuation.
The pharmaceutical sector, including Square Pharmaceuticals and Beximco Pharmaceuticals, is expected to remain relatively resilient, as steady demand for essential medicines could offset rising costs.
Analysts warn that if high fuel prices persist, earnings downgrades and cautious trading may dominate the stock market, with investors closely watching how different sectors absorb the shock.
