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Reckitt Benckiser declares 9-yr low dividend despite rising profits

Niaz Mahmud
31 Mar 2024 17:08:22 | Update: 31 Mar 2024 17:08:22
Reckitt Benckiser declares 9-yr low dividend despite rising profits

Reckitt Benckiser (Bangladesh) PLC, a publicly traded British multinational company, has declared its dividend for shareholders for 2023, the lowest in nine years, even though the company’s net profits increased by 24 per cent to Tk 82 crore.

The company declared a 550 per cent cash dividend for its shareholders for the year ended on December 31. The dividend was 980 per cent in the previous year. The declaration came at a board meeting on Thursday.

The multinational company’s net profits rose to Tk 82 crore last year from Tk 66 crore in the previous year, according to the financial statement.

Its earnings per share (EPS) were Tk 173.65 last year, which was Tk 139.5 in the previous year (2022).

To approve the dividend and the financial statement, the company will hold Annual General Meeting (AGM) on May 28, and the record date is April 25 this year.

Its net asset value (NAV) per share stood at Tk 252.69 and net operating cash flow per share (NOCFPS) at Tk 247.41 for the year ended on December 31, 2023, compared to Tk 176.80 and Tk 271.66 respectively for the previous year.

The company had made a net profit of Tk 80.81 crore in 2021, Tk 73.89 crore in 2020, and Tk 61.93 crore in 2019.

Reckitt Benckiser has been paying sound cash dividends over the years. But in 2022, it cut its cash dividend sharply to 980 per cent, the lowest since 2019.

The company disbursed a 1650 per cent cash dividend in 2021, the highest ever for any company listed on the Dhaka bourse.

Reckitt Benckiser (Bangladesh) is reporting revenue growth again, likely due to their move for raising product prices, according to an equity note about the company by EBL Securities Ltd, a leading stockbroker firm.

The publicly traded company has reported 7.55 per cent revenue growth in the first nine months (Jan-Sep) of 2023.

The company had reported revenue de-growth in 2020, and stagnant revenue growth in 2021 as the revenue of Reckitt Benckiser normalised from the boom the company experienced during Covid-19 crisis.

The listed multinational said that its operating expenses dropped significantly in the quarter under review, thanks to lower marketing costs, which created a positive impact on earnings.

Reckitt Benckiser has a wide array of product portfolios, including Finish, Lysol, Veet, Dettol, Air Wick, Durex, Mortein, Strepsils, Vanish, Trix, Mr Brasso, DermiCool, Harpic, and others.

Depreciating taka, rising raw material expenses, and increased freight costs have brought down the company’s gross profit margin (GPM) by 955 basis points (2021: 54.6 per cent, 2022: 45 per cent).

Although, GPM of Reckitt Benckiser has recovered by 377 basis points in 9m’23, it is still way below pre-pandemic level of 53 per cent to 57 per cent, according to the equity note.

It noted that the currency depreciation, rising raw material costs, and rising freight costs have adversely impacted Reckitt Benckiser’s margin in 2022 and 2023, and if these challenges persist, they will continue to undermine the company’s profitability.

The household and toiletries segment contributes to more than 90 per cent of the total revenue for Reckitt Benckiser.

Listed on the Dhaka Stock Exchange in 1987, Reckitt Benckiser’s shares closed at Tk 4,932.30 per share at the bourse’s trading floor on Thursday.

Reckitt Benckiser Ltd, UK, the parent company of Reckitt Benckiser Bangladesh, is the largest shareholder with a stake of 82.96 per cent. The Bangladesh government and Sadharan Bima Corporation also own 3.77 per cent and 1.67 per cent of the total shares respectively.