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Lower sales, higher costs eat up Linde Bangladesh profits

Niaz Mahmud
13 May 2023 00:00:00 | Update: 13 May 2023 00:29:53
Lower sales, higher costs eat up Linde Bangladesh profits

Linde Bangladesh Ltd, a prominent medical and industrial gas producer and supplier, has reported a 53 per cent year-on-year decline in net profit in the just concluded January-March quarter of the year 2023, thanks to lower sales and higher raw materials prices in the global market.

As per its unaudited financial statements, the multinational company made a net profit of Tk 14 crore in the first three months of this year, against the profit of Tk 30 crore in the same quarter of 2022.

The publicly traded company’s revenue also dropped by 8 per cent to Tk 125 crore in Q1 of 2023, down from Tk 136 crore in the January-March of 2022.

The company said its first quarterly profit decreased by over Tk 15 crore year-on-year due mainly to lower sales and a higher price of raw materials in the international market coupled with the recent forex market volatility.

Market insiders said the company’s profits declined owing to an increase in the cost of raw materials and the decreasing demand for medical gases after the ease of the Covid-19 global pandemic.

The demand for medical gases soared to 70–75 tonnes per day in 2020 and up to 100 tonnes per day in 2021 following the massive surge in demand in hospitals owing to the enormous spread of the pandemic.

The reason behind that growing demand was the use of oxygen for the Covid patients.

The pre-pandemic demand for medical gases was 30–35 tonnes per day, as per industry insiders.

The multinational company’s revenue and net profit took a hit after the ease of the pandemic due to the falling demand for oxygen and the increased cost of raw materials, sources at the company with knowledge of the matter said.

Linde Bangladesh operates as a manufacturer and supplier of industrial and medical gases, anesthesia, welding equipment and products, and ancillary equipment.

The company also earns from the rental of cylinders used by customers and from vacuum-insulated evaporators installed at customers’ premises.

The multinational’s earnings per share (EPS) fell to Tk 9.22 for the January-March quarter of the current year from Tk 19.65 for the same quarter last year.

Its net operating cash flow per share (NOCFPS) was Tk 37.53 negative for the first quarter of 2023 compared to Tk 13.71 for the January-March quarter of 2022.

In its first quarterly financial report, the company said its NOCFPS increased by Tk 23.82 because of favourable payment terms accepted by the overseas vendors.

The multinational’s net asset value (NAV) per share was Tk 406.65 as on March 31, 2023, which was Tk 415.20 till March 31 last year.

Incorporated in 1973, Linde Bangladesh got listed on the Dhaka Stock Exchange (DSE) in 1976 under the bourse’s fuel and power category.

Its shares were traded at Tk 1,397.70 each on the DSE’s trading floor on Thursday.

In 2022, the company’s net profit slumped to the lowest level over six years. The profit of the multinational gas manufacturer declined by 28 per cent to Tk 88.32 crore last year, compared to Tk 122.58 crore in 2021.

The company’s earnings per share were Tk 58.04 in 2022, compared to Tk 80.55 the previous year, according to the audited financial statements. At the end of 2022, the multinational’s net asset value per share stood at Tk 397.44.

Linde gave a 420 per cent cash dividend to its shareholders for the year ended in December 2022, which was 550 per cent cash for 2021.