Home ›› Stocks

Declares lowest dividend in 7 years 

Renata sees 55% profit decline in FY23 despite revenue growth

Niaz Mahmud
21 Oct 2023 19:32:57 | Update: 21 Oct 2023 19:32:57
Renata sees 55% profit decline in FY23 despite revenue growth

Renata Limited, a leading drug manufacturer in Bangladesh, witnessed a 54.8 per cent year-on-year drop in net profit in the fiscal year 2022–23, though its revenue grew by 6 per cent in the year.

The situation, as per the company, is credited to the increase in the prices of raw materials and the rise in energy prices caused by the global dollar crisis.

The publicly traded company on Saturday declared a 62.5 per cent cash dividend for FY23 to its shareholders, the lowest in the last seven years.

The drug maker’s profit after tax was Tk 231 crore in FY23, down from Tk 511 crore recorded in the previous fiscal year.

According to the pharmaceutical company’s audited FY23 financial report, its net revenue grew by 5.8 per cent, amounting to Tk 3,287 crore against Tk 3,107 crore in FY22.

Renata’s Company Secretary Md Jubayer Alam told The Business Post that the company’s profit was very good in the first quarter of FY23. But at the end of the year, profits fell due to an increase of 20–25 per cent in the prices of raw materials, along with an increase in energy prices, an increase in borrowing costs, and an increase in foreign exchange losses on imports.

Meanwhile, prices of only 41 out of the company’s 671 brands of medicine increased during the period, he added.

The taka lost about 25 per cent of its value in the recent period due to the dollar shortage caused by the Russia-Ukraine war.

The medicine manufacturer’s consolidated earnings per share (EPS) fell to Tk 20.40 in the last fiscal year, against the previous fiscal’s EPS of Tk 44.56, according to its audited financial statements.

The company’s consolidated net cash flow per share (NOCFPS) was Tk 18.18 for FY23 against Tk 26.24 for FY22.

Renata’s net asset value (NAV) per share stood at Tk 266.87 as on June 30, 2023, which was Tk 256.43 as on June 30, 2022.

The final approval of dividends will come during the annual general meeting (AGM) scheduled to be held on December 9 through a digital platform. The record date for the entitlement of dividends is November 12.

The company’s board of directors on Saturday decided to issue redeemable, cumulative, non-convertible, and non-participative preference shares amounting to up to Tk 350 crore to refinance the existing loans with preference shares subject to approval from the shareholders of the company.

The board of directors also decided to issue a zero-coupon bond amounting to Tk 500 crore to refinance the existing loans, subject to approval from the Bangladesh Securities and Exchange Commission.

The company recorded a profit of Tk 124 crore in the July-September quarter of FY23, down from Tk 138 crore in the corresponding period of the previous fiscal, while its total sales fell to Tk 11.62 crore in the quarter from Tk 12.90 crore in the same quarter of the previous year.

The drug maker’s sales rose 10.56 per cent year-on-year to Tk 837 crore in Q1 of FY23, while its profit declined as expenses also climbed up 14 per cent to Tk 651 crore at that time.

Renata’s turnover declined to Tk 757.6 crore in the October–December period of 2022 from Tk 762.9 crore in the same period the previous year. However, its cost of sales hiked by 21 per cent year-on-year to Tk 483.7 crore in the second quarter of the financial year 2022-23.

Renata posted Tk 87.8 crore as income in the second quarter, which ends in December 2022, down from Tk 135.9 crore in the same period the year before.

The company is engaged in the business of manufacturing, marketing, and distributing medicines, nutritional products, and vaccines for humans, along with veterinary medications.

The company started its operations in 1972 as Pfizer (Bangladesh) Limited. However, in 1993, Pfizer transferred ownership of its operations to local shareholders, and the company name was changed to Renata Limited.

The drug manufacturer was enlisted on the stock exchanges in 1979, and currently its shares are stuck on the floor price of Tk 1,217.90 each.