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Marico Bangladesh, a market leader in the country’s beauty and wellness space, witnessed a significant export growth of over 129 per cent in the fiscal year 2021-22.
The contribution of export earnings to the multinational firm’s revenue also rose to 1.80 per cent in the last fiscal from 0.90 per cent and 0.57 per cent respectively in the two previous fiscals.
The publicly listed company started its export operations back in 2019, and its prime export destinations are India, Nepal, Vietnam, and Middle East countries, according to a report prepared by EBL Securities.
Marico Bangladesh, whose portfolio comprises largely personal grooming products ranges from hair oil to hair dye, body lotion, baby care, and men’s toiletries to cooking oil.
The company produces 99 per cent of its products in Bangladesh. It first established a manufacturing unit on rented property in Gazipur and commenced commercial production in October 2002.
Later, it grew fast and subsequently became a trusted brand in the beauty and wellness space in Bangladesh.
After securing a strong grip on Bangladesh’s market, the company was now trying to ensure a dominant footprint in the global markets.
Starting the journey with a single product – Parachute Coconut Oil – the beauty and wellness brand over the last decade invested heavily in diversifying its brand portfolio.
The company now touches the lives of one out of every two Bangladeshis with a wide array of brands in various categories, including hair nourishment, edible oil, and male grooming, through a strong distribution network that reaches more than 790,000 outlets throughout the country, according to data available on the company’s website.
Parachute Coconut Oil, accounted for more than 90 per cent of Marico’s revenue till FY12.
But since then, the contribution of other categories and especially the value-added hair oil (VAHO) increased sharply.
VAHO has been the biggest growth driver of Marico over the last decade as the company gradually rolled out several new brands, products, and SKUs in this category.
In terms of its accounting year from April to March, the company posted Tk 97.43 crore in net profit in the third quarter of the fiscal year 2022-23, up 13 per cent from the profit of Tk 86.15 crore in the same period last year.
The Indian fast-moving consumer goods company’s gross profit margin, however, lowered to 51.22 per cent in the first nine months of FY23 from 54.60 per cent in the same period of FY22 due mainly to a rise in raw materials prices.
The company, however, has been successful in its cost-controlling measures which helped it secure a healthy profit during that time.
As per the EBL Securities report, Marico has made intensive investments over the last decade to diversify its product portfolio from relying on Parachute Coconut Oil brand (PCNO) for more than 90 per cent of its revenue up until FY12 to a multi-brand portfolio with Non-PCNO segments accounting for close to 40 per cent of the total revenue in FY22.
Product portfolio diversification enabled it to enter a high growth phase of its topline revenue from FY17 to FY22 largely owing to the growth from its non-PCNO.
Marico is currently implementing its third manufacturing plant at Bangabandhu Shilpanagar and plans to invest Tk 2.27 billion there and the plant is expected to start commercial operations in 2023.
The company expects this plant to cater to its growing hair oil portfolio as well as inventory for raw and packaging materials, the EBL Securities report said.
Marico has consistently been generating high free cash flow while also maintaining a very high dividend payout ratio and dividend yield.
The company has already declared and disbursed Tk 75 in dividends per share in the current fiscal year (FY23). Investors have the opportunity to receive quarterly dividend payments and earn a handsome dividend yield by owning Marico stock, as per the EBL Securities study.
The firm is largely dependent on imported raw materials such as Copra and Light Liquid Paraffin for the production of its PCNO and VAHO products.
Incorporated in 1999, Marico Bangladesh started its operations in 2000 and got listed on the stock exchanges in 2009.
Marico shares closed at Tk 2,421.5 per share on the Dhaka stock exchange on Thursday.
