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Reckitt Benckiser’s net profit growth slows down

Talukder Farhad
25 Sep 2021 00:00:00 | Update: 25 Sep 2021 09:49:56
Reckitt Benckiser’s net profit growth slows down

Despite a high demand for health safety products during the pandemic, Reckitt Benckiser’s health, hygiene and nutrition products apparently failed to keep the company’s net profit growth up in financial year 2020.

The publicly trading company’s net profit growth slowed down in 2020 as the growth rate, which was more than 90 per cent in pre-pandemic period, fell down to 17 per cent in the year.

The company officials attributed the lower growth rate to increased business cost due to health safety expenses, rise in raw materials’ price and disruption in supply chain.

However, the multinational company registered a five-year high revenue growth last year.

Analyzing the company’s last five annual financial statements, it was obtained that Reckitt Benckiser reported the lowest profit-growth rate in 2020.

The company even failed to recover from the lower profit-growth in the first six months of the current year despite having the pandemic restrictions eased up.

Reckitt Benckiser gained a profit of Tk 29.3 crore in the January-June period, with a seven per cent growth rate compared to that of previous year’s same period.

In the first half of 2020, the company’s profit was Tk 27.17 crore.

Keeping similar pace with profit, its revenue also declined by three per cent to Tk 250.76 crore in the first half of the current year, compared to that of the same period in previous year.

While talking to The Business Post, an official of the company said that they left no stone unturned to retain the profit growth. However, the goal cannot be achieved as the cost of doing business increased manifold.

“Regular activities were severely disrupted due to the widespread outbreak of the Covid-19 last year. The staff could not attend workplaces in person as offices were closed to tame the tide of coronavirus,” he said.

The official further added that they did not compromise in ensuring product quality despite the higher business cost.

But the market price remained unchanged, forcing the company to embrace a lower profit growth, he mentioned.

However, he claimed that decline in profit growth does not imply that a company failed to take advantage of situation. This idea is not correct, he said.

“The demand for hygienic products increased in pandemic. Many companies reaped benefit from the tiring situation and raised their products’ prices unethically. We didn’t opt for that route, yet our sales went up last year,” said the official.

According to its annual report-20, the company’s revenue growth was higher in the year, compared to that of the previous year.

The revenue growth, which was around 16 per cent in 2019, stood at more than 29 per cent last year.

Many listed giant companies, who bagged good profit in the previous year, distributed comparatively low-dividends, drawing criticism.

The scenario is different when it comes to Reckitt Benckiser as the company disbursed the highest ever cash dividend – 1,400 per cent – for the year-20.

According to the Dhaka Stock Exchange (DSE) data, the company currently has a reserve of Tk 77.5 crore.

Reckitt Benckiser is best known for Dettol and Harpic, while its other products include Lizol, Trix, Mr Brasso, Veet, and Durex.

Reckitt Benckiser (Bangladesh) was incorporated in 1961. The company got listed in stock market in 1987.

Its share price increased 1.27 per cent on the last trading day at the DSE to Tk 4,826.60.

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