A report by the Monetary and Banking Research Institute (MBRI) shows that industrial input improved in the fourth calendar month ending July 22.
The industrial production index (IPI) rose 6% in the month from the corresponding period last year and 2.5% higher y/y, according to the MBRI report seen on its website.
IPI is drawn by assessing the monthly performance of 280 companies listed in the Tehran Stock Exchange and Iran Fara Bourse, the junior equities exchange.
These companies account for more than half the industrial production in Iran and their performance is seen as a reliable barometer for appraising domestic production, the MBRI said.
Improvement started in the third calendar month after the IPI bucked a five-month declining trend. Rise in overall IPI is largely owed to the increase in the output of auto companies and higher chemical and base metal production.
A sector–by-sector analysis shows decline in food industries, and metallic products amid trivial growth in electronic equipment and petroleum products.
Auto and spare parts logged the highest annual rise in production during the month. Annual IPI for industries in this sector jumped 15% in the month after 18.1% rise the month before.
In addition, the chemical industries index improved on the 1% growth in the previous month to rise 4.2% in the fourth calendar month. That was the highest annualized growth in past year.
Likewise, basic metals index hiked 8% and machineries climbed by an annual 16.5%. Tire and plastic, textiles and paper products were among the top industries.
The food industries index dropped 8.1% in the month as the worst-performing industry. However, it improved on 15.6% annual decline in the month before.
Rising Inventory
Increased production was followed by rise in warehouse stock of big industries, which is not a good omen. It shows that sales have not grown in proportion to production, which ultimately forces industries to cut input.
Warehouse stock or stock inventory is the collection of all materials and goods stored, whether for use to complete the production process or for sale to customers.
Inventory rises if production is higher than sales in a particular period of time and vice versa.
The overall stock inventory index dropped 2.3%, which was higher than the 5.8% decline in the earlier month. Petrochemical industries reported 11.9% rise in their inventories. This was while the index was the lowest at 32.8% for auto industries, showing that sales outpaced production.
Profitability of the listed industries was also in the MBRI review. Based on the financial statements of companies in the twelve months ending in the last fiscal year (March 20, 34 companies were in the red last year.
The auto and spare part makers, despite higher output, were disappointing and atop the worst-performing industries. Overall loss incurred by companies in this sector was more than 30% over and above on the previous year.
It is worthy of mention that the domestic auto industry, plagued by gross mismanagement and absence of transparency, has been sinking in an ocean of red for decades.
And this is despite regular infusions of cash and bailouts by successive governments, namely for the two main carmakers, Iran Khodro and SAIPA.
Likewise, the quality of domestically-produced autos has shockingly declined and prices have jumped several hundred percent in the past few years.
