Profit of six companies rises, that of three falls in January-September
The businesses of the multinational companies operating in Bangladesh are thriving, especially profits of the companies that produce Parachute coconut oil, Dettol, Harpic and Oxygen are on the rise.
However, multinationals that manufacture cement, shoes and cigarette are witnessing a fall in their profit.
An analysis of the business accounts of first nine months of the current accounting year of nine out of 10 multinational companies listed with the stock market showed this.
Of these, business and profit of LafargeHolcim, Marico, Reckitt-Benckiser, Glaxo SmithKline (GSK), Grameenphone and Linde Bangladesh have increased. However, the profit of Bata Shoe, British American Tobacco (BAT) and Heidelberg Cement fell.
The conflict between the Bangladesh Telecommunication Regulatory Commission (BTRC) and Grameenphone over realising the BTRC's dues is much talked about in the share market. The BTRC claims that Grameenphone owes it Tk12,000 crore. To realise the dues the BTRC has imposed sanctions on Grameenphone's, halting the company from taking up new project and purchase of equipment for expanding its business.
The Bangladesh Telecommunication Regulatory Commission has also issued a notice saying it would suspend Grameenphone's licence if the dues were not paid to the telecom regulator. As a result, the share price of the company dropped by 13 percent. Even in such a context, Grameenphone's business increased by 10 percent and its net profit by 2 percent in the first nine months of the current year.
Michael Patrick Foley, chief executive officer (CEO) of Grameenphone said despite the conflict with the telecom regulator both business and profit of Grameenphone have increased.
The issue of dues is now under trial.
Foley hoped that the crisis will be over soon.
As the business of Dettol and Harpic expanded, the sales of Reckitt-Benckiser rose by 17 percent and its profit increased by 60 percent in the January-September period. The company has been getting the benefit of producing Dettol in its own factory. Earlier, Dettol was produced through toll manufacturing in others' factory.
At present the share of Reckitt-Benckiser is the priciest in the Dhaka Stock Exchange. In last nine month, the share price of the company rose by 34 percent. At the closing of Wednesday, the company's share price was Tk2,875.80.
A high official of the company requesting anonymity told The Business Standard the cost has come down as they have been producing Dettol in their own factory. The business of Harpic is also on the rise thanks to a proper marketing policy.
Parachute brand has captured a big chunk of the coconut oil market in the country. Now Parachute is doing good business all over the country. As a result, Marico Bangladesh, the producer of Parachute coconut oil, is doing good business.
In the first nine months of the current year, the company's sales rose by 13 percent. The production cost decreased as the price of coconut oil is low in the world market. So, the company's profit increased by 46 percent over the previous year.
The company has been enjoying a steady rise in its profit for the last five years. Among the multinationals listed with the share market, on Marico's profit has been increasing continuously. Its impact has also been felt on the share of the company. The share price of the company increased by 43 percent in the Dhaka Stock Exchange over the last nine months.
Masud Khan, an independent director of the Company told The Business Standard, Marico knows how to win the hearts of the consumers. As the demand of the company's has been rising in the market another factory will be built. He said preparations for releasing a new-flavour coconut oil in the market is also going on.
As the pharma factory was closed last year the company had too count a loss of Tk64 crore. The loss was propelled by the compensation paid to the people concerned for closure of the pharma business.
The company shut the factory as the pharma division of the company had been suffering loss for long.
Now, the company has been continuing the business of its consumer section. There they produce Horlicks, Glaxo or Glucose, Sensodyne toothpastes and Boost drinks now. The company's most popular brand is Horlicks.
The company's business fell by three percent in the first nine months of the current year. But it made good profit. During the period, the company's net profit was Tk52 crore. In the previous year, it incurred a loss of Tk40 crore.
Masud Khan who is an independent director of GSK said as the sale of Horlicks rose the company has been working to increase the variety of the healthy product. Alongside, the business of Sensodyne toothpaste is also on the rise.
Despite rise in production cost and instability in the cement market the business of LafargeHolcim increased. In the first nine months of the current year, the sale of Lafarge cement soared by 8 percent and the company's profit rose by 141 percent.
The company itself manufactures the raw materials for cement and in the current year it has cut the marketing cost drastically. Besides, it got the benefit of giving emphasis on realising dues from the market.
Masud Khan worked as the chief financial officer of LafargeHolcim Cement for long. He said they have gone through many hard times in the cement business. Now the company's status is stable.
The company has been lagging behind in competition with local companies in cement business. Its net profit decreased by 98 percent as the production and marketing cost of the company is much higher in the first nine months of the current year. But during the period its cement sale increased by 10 percent.
As the price of the company's share nosedived continuously its share price decreased by 51 percent. On Wednesday, the closing price of the company's share in the Dhaka Stock Exchange was Tk164.
A high official of Heidelberg Cement requesting not to be named said the production cost of cement has gone up as the government has imposed advance tax on its production. He opined that local companies have been making cement market instable by intentionally selling cement at lower price.
The company has started producing carbon dioxide in its new factory. They have already established a monopoly in the Oxygen business. As a result, the company's sale has risen by 10 percent in the first nine months of the current year. During the period, its profit increased by 27 percent. In last four years, the company's net profit rose by 54 percent and the company touched Tk100 crore milestone for the first time in 2018.
Mohsin Uddin Ahmed, managing director of the company told The Business Standard that the demand of Oxygen in the country's hospitals has been increasing. The company has been receiving good response to its new business of Carbon dioxide. It has a positive impact on the company's profit.
Both sales and profit of Bata Shoe have decreased in the first nine months of the current year as the company has stopped sale on credit. The credit to the dealers rose at an alarming rate.
The company got audit objection due to this. As per the recommendation of the auditors, the company stopped whole sale business on credit and started business on cash payment basis.
As a result, the orders from the dealers decreased which resulted in a 12 percent fall in the sale of Bata Shoe in the first nine months of the current year. As more amount of deferred tax provisioning was done the company's net profit decreased by 61 percent.
Md Hashim Reza, Company secretary said, from this year Bata Shoe will not supply shoes to the dealers on credit. Rather it will give emphasis on retail business.
British American Tobacco
The government has increased the supplementary duty on all types of cigarettes in the budget for the current accounting year. As a result, the production cost of cigarettes has shot up. In the first nine months of the current year British American Tobacco's sale increased by 14 percent but its net profit fell by 18 percent.