Reckitt Benckiser (Bangladesh) experienced a marginal drop in profit in the second quarter to June this year, compared to the same quarter last year, owing to lower sales amid inflationary pressure.
The UK-based multinational firm, which sells health and hygiene products, made a profit of Tk 140 million in April-June this year, reduced from Tk 142 million in the same period the year before, according to its un-audited financial statements published on Tuesday.
The company managed to offset some of the expenses through operating efficiency, but higher cost of sales and increased net finance expenses eroded the bottom-line growth.
The company’s revenue dropped around 1 per cent year-on-year to Tk 1.34 billion while finance costs jumped 66 per cent year-on-year to Tk 14.36 million in the June quarter.
The cost of goods sold, which is the sum of all direct costs associated with making a product, was around 53 per cent of Reckitt Benckiser’s total sales in the June quarter while it was 51 per cent in the same quarter a year ago.
Its half-yearly profit, however, remained almost static – about Tk 294 million — in January-June this year.
The net operating cash flow per share of the company, an indicator that shows a company’s ability to generate cash from its operations, turned Tk 98.13 in the six months to June this year, recovering significantly from Tk 18.90 in the negative in the same period last year.
The improvement in the cash flow was driven by higher collection from customers.
Meanwhile, the stock of Reckitt Benckiser dropped 2.37 per cent to Tk 3,384.4 per share on the Dhaka Stock Exchange on Tuesday. Still, it is the most valued stock in the country’s capital market.
Reckitt Benckiser had seen its business growth accelerate after the Covid outbreak when the use of hygiene products shot up in measures to contain the spread of the Coronavirus.
Its top-selling products are meant for hygiene, such as Dettol and Harpic. They are also household names in the particular areas. As the pandemic waned and the Russia-Ukraine war began leading to a global economic slowdown, consumers’ purchasing behaviour changed.
The huge demand for hygiene products diminished due to inflationary pressure squeezing people’s capacity to buy even essential items.
High inflation affected consumption patterns. Many people shifted from branded products to non-branded ones to cope with high expenses.
Meanwhile, Reckitt declared the highest-ever 3,330 per cent cash dividend for 2024, despite an 8.2 per cent year-on-year decline in profit in the year.
Source: The Financial Express
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