MNCs face tough Jul-Sep quarter as revenue, profit declines for most

Infographics: TBS

Most multinational companies (MNCs) in the country experienced a challenging July-September 2024 quarter, as revenue and profit declined due to widespread political uncertainty and natural disasters affecting much of the country during the period.

High inflation, a forex crisis, lower sales, and gas shortages also contributed to the losses for many of these firms.

Out of 13 listed MNCs, 11 in manufacturing and two in telecom, most reported declines in revenue compared to the same quarter last year in their unaudited financial statements for the July-September quarter. 

Companies such as LafargeHolcim, Heidelberg Materials, Bata, RAK Ceramics, Reckitt Benckiser, Unilever Consumer Care, Grameenphone, Robi, and Linde BD have reported declines in revenue. Only a few, such as Singer, Marico, BATBC, and Berger Paints, managed to post revenue growth despite these challenges. 

Moreover, due to the difficult circumstances, most MNCs struggled to achieve profit growth, with only Berger Paints, Marico Bangladesh, Linde BD, and Grameenphone managing year-on-year profit increases. 

Among the MNCs, Singer Bangladesh, Heidelberg Materials, Bata, and RAK Ceramics reported significant losses.

Singer reported a substantial loss despite achieving 7% revenue growth, primarily due to the foreign exchange crisis, which raised import costs, as well as increased expenses from extensive promotional activities. The company's offering of large discounts during this period was also a contributing factor, impacting the company's profitability, according to its statement.

Bata Shoe attributed its losses to reduced working days caused by unforeseen events that limited retail operations, leading to lower sales and profitability. 

RAK Ceramics, in its financial statement, cited a demand-supply gap caused by underutilised plant capacity due to interrupted gas supply as a reason for its losses. Additionally, production and sales were significantly impacted by unprecedented political disruptions in the quarter, it added.

Heidelberg Materials reported a decrease in earnings compared to the same period last year, attributing this decline to lower sales volume and a reduced net sales price per tonne. Its net operating cash flow per share also decreased due to reduced sales volume, slower collections, and higher income tax payments.

LafargeHolcim Bangladesh Ltd announced a sharp 45% decline in profit and a 2% drop in sales for the quarter, citing ongoing macroeconomic challenges affecting the construction industry.

In contrast, Linde Bangladesh, a multinational industrial and medical gas producer, reported a profit of Tk609 crore for the quarter, up from Tk2.30 crore a year ago. 

This increase was driven by approximately Tk600 crore earned from the divestment of its subsidiary engaged in the welding electrodes business, allowing the firm to recommend a record 4,100% interim cash dividend for its shareholders.

Yasir Azman, CEO of Grameenphone, acknowledged that the quarter was challenging due to economic and political pressures, natural disasters, and operational disruptions. 

However, despite these hurdles, Grameenphone maintained strong financial and operational stability while continuing to invest in growth areas, according to a statement from the company.

During the crisis, the company guided customers on mobile recharges, emergency balances, and accessing essential services to support them through difficult times.

Yasir emphasised Grameenphone's commitment to sustainable procurement, noting that 72% of supplier spending goes to partners focused on reducing carbon footprints. 

As an industry leader, he highlighted the importance of collaboration with the government and policymakers to create an investment-friendly environment that fosters innovation, meets customer needs, and promotes fair competition in the digital age.

Rajeev Sethi, managing director and CEO of Robi, commented on the company's financial performance, stating that the July–September period was unprecedented due to an eleven-day internet shutdown during civil unrest and significant flooding, which negatively impacted revenue as many data users left the network. 

However, Robi's cost-efficiency programme helped the company achieve some profit by the end of the quarter.

He expressed optimism about recent regulatory reforms in the telecom sector and emphasised Robi's cooperation in implementing these changes. 

He also noted that Robi paid 61% of its revenue in taxes from January to September, stressing that such high taxation hinders the company's ability to invest in its data network.