MNCs’ profits grow despite slowing economy

Most of the listed multinational companies (MNCs) have reported higher net profit in the third quarter (Jul-Sep’22) of the year compared to the same period last year, despite the energy supply shortage and a drastic rise in energy prices in the global market triggered by the Russia-Ukraine war.

Meanwhile, most local publicly traded companies posted negative growth in the period due to a steep rise in their production costs and other expenses, triggered by the soaring raw materials prices in the global market with the mighty dollar value against the Taka, eventually burning through their cashbooks.

However, MNCs posted higher net profits in the same period. Speaking to The Business Post, experts attributed this high performance of MNCs to management efficiency, business strategy, good corporate governance and ethical standards, and transparency in financial statements.

According to IDLC Investments, a leading investment bank, there are 13 MNCs listed on the Dhaka Stock Exchange (DSE). Eight out of 13 companies saw higher profits, while five other companies witnessed negative profit growth during the period.

MNCs’ net profit jumped by 7.88 per cent to Tk 1,656 crore in the three months (Jul-Sep’22), which was Tk 1,535 crore in the same period of the previous year.

LafargeHolcim Bangladesh Ltd (LHBL) posted positive growth during the period. The cement maker declared an interim cash dividend as the company has so far secured stellar business growth in the current year, according to a media statement, defying the sluggish domestic market created by the ongoing macroeconomic hardships.

In the third quarter (July-September) of this year, the multinational cement maker posted a net profit of Tk 113.5 crore versus Tk 93.7 crore in the same period of 2021.

The cement maker’s net sales also jumped by 24 per cent to Tk 571 crore in Q3 of 2022 compared to Tk 460 crore in Q3 of 2021, according to the company’s latest financial statement.

Its earnings per share (EPS) rose to Tk 0.98 in Q3 this year from Tk 0.81 in Q3 of 2021.

Meanwhile, Heidelberg Cement Bangladesh reported a loss of Tk 3.60 crore in the period. Its net loss was Tk 10.79 crore.

Linde Bangladesh, a multinational company listed on the Dhaka and Chittagong Stock Exchanges, witnessed a sharp fall in profits.

According to the financial statement of Linde Bangladesh, during the period it recorded profits after tax of Tk 21 crore, which was Tk 27 crore in the same period last year.

Reckitt Benckiser, the maker of Dettol and Lysol disinfectants, saw its profit fall to Tk 18.82 in the three months.

The British hygiene, health, and nutrition product manufacturer’s products in Bangladesh include Finish, Lysol, Veet, Dettol, Air Wick, Durex, Mortein, Strepsils, Vanish, Trix, Mr Brasso, DermiCool and Harpic.

Marico Bangladesh, the maker of the well-known Parachute Coconut Oil, profited Tk 97 crore in three months, up from Tk 89 crore in the same period of the previous year.

Although Singer Bangladesh logged higher sales between July and September this year, the company still incurred losses in the quarter.

Singer’s profit decreased from Tk 59.5 crore to Tk 14.6 crore at the same time, with its earnings per share decreasing from Tk 5.97 to Tk. 1.46 as a result. The profit dropped because of losses in the July-September period when the company’s earnings per share stood at Tk 0.85 in the negative.

Robi Axiata Limited, the country’s second-largest mobile operator, posted a net profit of Tk 29.2 crore in the third quarter (July-September) this year versus Tk 86.45 crore in the same period last year.

British American Tobacco (BAT) Bangladesh, the country’s top tobacco manufacturer, posted a staggering 39 per cent year-on-year surge in net profit in the third quarter (July-September) of 2022.

In July-September this year, the company logged a net profit of Tk 410 crore against Tk 294 crore in net profit in the same period last year.

Grameenphone’s net profit has increased by Tk 52 crore compared to the same period of the previous year. Its earnings per share (EPS) for the third quarter of 2022 were Tk 6.72, compared to Tk 6.34 in the same period last year.

During the period, the company earned Tk 3,864 crore in revenue, compared to Tk 3,620 crore in the same period last year. In the third quarter, Grameenphone earned a net profit of Tk 907 crore, down from Tk 855 crore in the same period of the previous year.

Footwear brand Bata Shoe Company (Bangladesh) posted a loss in the third quarter of 2022.

The net profit of Unilever Consumer Care Bangladesh stood Tk 18.72 crore in the third quarter of this year. In the same period last year, the company, formerly known as GSK, earned a net profit of Tk 16.28 crore.

The listed multinational companies have been playing a crucial role in keeping the Bangladeshi capital market vibrant as their collective contribution to the market capitalisation of the Dhaka Stock Exchange is more than 27 per cent.

Capital market analysts attributed the MNCs’ high performance to their efficiency, time-befitting business strategy, good corporate governance, strong ethical standards, and transparency in financial statements.

Earlier, at an event, the leaders of the DSE Brokers Association of Bangladesh (DBA) suggested listing quality and MNC companies to boost the capital market, saying there is a crisis of good companies in the stock market.

DBA President Richard D’ Rozario said, “The regulatory body, Bangladesh Securities And Exchange Commission (BSEC), is doing a commendable job in various ways, including reforming the different securities rules.”

“However, in order to get the benefits of these efforts, it is necessary to increase the number of good shares in the market. All stakeholders, including BSEC, have a role to play in this regard,” he added.