July 21, 2024 4:35 pm
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Reckitt Benckiser to give decade-low dividends, despite profit growth

by fstcap

Reckitt Benckiser (Bangladesh) declared the lowest dividend in a decade for 2023, despite achieving more than 24 per cent year-on-year growth in profit.

The UK-based multinational firm that sells health and hygiene-related products logged an annual profit of Tk 820 million in 2023, up from Tk 659 million the year before.

Subsequently, the company’s earnings per share jumped to Tk 173.65 per share for 2023 from Tk 139.50 a year ago, according to its earnings disclosure on Thursday.

Company secretary Md Nazmul Arefin could not be reached for comments.

Seeking anonymity, an official said the company cut down administrative and marketing expenses significantly to keep operating costs low, which, in turn, helped its profit grow.

The company also managed to offset some of the costs by increasing product prices, he added.

Reckitt earlier spent a lot of money on creating mass awareness about the strength of its products, but it recently slashed the spending drastically.

It is yet to disclose its annual revenue for 2023. However, its nine-month revenue was Tk 4.05 billion, which was 7.42 per cent higher compared to the same period a year ago.

Despite the impressive growth in profit, the board of directors of the company cut cash dividends sharply to 550 per cent for 2023, from 980 per cent for 2022.

The dollar crisis might be a reason behind the recommendation of lower cash dividends, said Minhaz Mannan Emon, managing director of BLI Securities.

“Many companies are trying to retain profits due to the increase in business costs brought on by high inflation.”

Besides, multinational companies are facing problems in repatriating dividend amounts due to the greenback shortage, which might discourage them from providing higher cash dividends, he added.

Earlier, Reckitt declared the highest cash dividends among the listed companies for three years in a row since 2019, luring investors to its stock. That resulted in the share price going through the roof.

Its stock price rose 0.76 per cent further to Tk 4,932.3 per share on Thursday. Reckitt has remained the most-valued stock in the market in the past few years.

The company’s annual general meeting will be held on May 30 while the record is April 25.

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, the demand for hygiene products diminished while the inflationary pressure squeezed people’s capacity to buy even essential items. At the same time, the taka became cheaper against the dollar, increasing import costs.

High inflation affected consumption patterns. Many people shifted from branded products to non-branded ones to cope with higher expenses.

Bangladesh witnessed a decade high inflation at 9.94 per cent in May 2023. Although inflation cooled gradually over the last few months to 9.67 per cent in February this year, it is still higher than expected.

Source: thefinancialexpress

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