Bata Shoe’s profit swells 53pc, on cost cutting, selling price hikes

Bata Shoe’s profit jumped 53 per cent year-on-year to Tk 422 million in the nine months through September this year, as it brought down cost of sales and hiked selling prices.

During the period, the multinational footwear maker’s revenue rose only 1.34 per cent, compared to the same period, according to its unaudited financial statements. The profit grew at a much faster pace than revenue as the company increased selling prices. As a result, the earnings per share (EPS) surged to Tk 30.88 for Jan-Sept this year from Tk 20.11 for the same period a year ago. However, in the third quarter ended in September, the company counted a loss of Tk 16.25 million, 72 per cent down from the loss reported for the same quarter last year. Cost cuts and foreign exchange gain helped reduce loss in Q3. Over the nine-month period ended in September, Bata’s finance income more than doubled to Tk 78 million, while finance costs fell 55 per cent year-on-year to Tk 117 million. Accordingly, net finance cost plummeted 83 per cent year-on-year to Tk 38.34 million in the nine months through September this year. Explaining the steep decline in finance cost, an official of the company, requesting not to be named, said the company had purchased 26 per cent less finished goods during the nine-month period, compared to a year earlier, while cost of raw materials dropped 12.50 per cent. Cheaper raw materials helped the company to reduce foreign exchange loss to nil in Jan-Sept from Tk 150 million during the same period last year. Earnings per share escalated due to efficient management of costs and net foreign exchange gain, said the company in its earnings note. Meanwhile, the company declared a 330 per cent interim cash dividend, depending on the nine-month business performance and retained earnings up to the end of last year. The company will disburse more than Tk 451 million in interim cash dividends. The record date for entitlement of interim cash dividend is November 21. The net operating cash flow per share was Tk 39.28 for January-September 2023, down from Tk 53.97 a year ago because of payments to suppliers and contractors for goods and services. The stock dropped 0.60 per cent to close at Tk 989.20 per share on Wednesday. The shoe maker went into the red in 2020 for the first time in its six decades of operations in Bangladesh as annual sales dropped 41 per cent due to Covid restrictions. Recurring Covid waves snatched business opportunities in 2021 as well, as the two Eid festivals, which usually contribute to more than one-third of Bata’s annual sales, were lost to lockdowns. Since there were no restrictions in 2022, the shoe business could recover but not to the expected level because of the depreciation of the taka against the dollar. On the other hand, Bata’s nearest competitor Apex Footwear witnessed record sales and sales growth in FY23, thanks to increased export and domestic sales . The country’s leading footwear maker’s export soared more than 35 per cent year-on-year to Tk 7.14 billion while domestic sales jumped 22.25 per cent to Tk 9.40 billion in FY23, compared to the previous fiscal year. Apex’s high revenue income led to a 21 per cent year-on-year surge in profit in FY23. Financial Express