sharebazar

Olympic Industries Ltd, a leading manufacturer of biscuits and confectionery items, witnessed an increase in the cost of goods sold (COGS) to Tk 1,968 crore or 76 per cent of total sales in FY23, which is a rise from 3-year average of 72 per cent.

Cost of goods sold (COGS) refers to the direct costs of producing the goods sold by a company. Olympic’s increase in COGS was exacerbated by the rapid devaluation of the taka, and higher commodity prices recorded in the last FY.

Furthermore, the publicly traded company is facing additional challenges in recovering margin due to the increase in energy prices, including a 51.6 per cent hike in octane, a 42.5 per cent jump in diesel, and a 22.78 per cent increase in natural gas, EBL Securities, the leading stock broker, said in an equity report on the company.

Despite YoY improvements in profitability margins in FY23, the company has not yet reached its optimal performance level, which typically exhibits gross profit margins of 30 per cent, operating profit margins of 16 per cent, and net profit margins of 12 per cent.

The average purchase prices of key raw materials in FY23, namely wheat flour, sugar, and palm oil, were higher by 33 per cent, 18 per cent, and 58 per cent, respectively, while compared to the prices of FY21, therefore impacting profit margins.

However, the falling commodity prices late in 2023 should ease cost pressures in upcoming fiscals, according to the RBL Securities note.

In FY23, the company demonstrated YoY growth of 20 per cent in revenue and 29 per cent in net profit. This growth was driven by the company’s ability to increase prices per stock-keeping unit in order to pass higher input costs onto consumers.

As a result, the company observed a rise in its profitability margins, with gross profit margin, operating profit margin, and net profit margin increasing to 23.8 per cent, 8.55 per cent, and 6.04 per cent, respectively, compared to 23 per cent, 7.2 per cent, and 5.6 per cent a year ago.

The expansion of the product portfolio beyond just biscuits has allowed the company to improve profitability, EBL Securities said.

Over the past three years, the company has made significant investments in various areas with a view to entering major segments of snacks such as instant noodles, dry cake, soft cake, chocolate-enrobed wafers, filled candies, toffees, toast, rusk, and savory snacks, in addition to its established presence in the biscuit industry.

Olympic has cumulatively invested Tk 63 crore, Tk 34 crore, Tk 14 crore, and Tk 45 crore in storage extension works, import of machines to facilitate product diversification, import of packaging machines, and land purchase and registration, respectively, in the last 3 years.

These investments are a clear indication of the company’s expansion strategy, as per the report.

In 2023, the company began commercial production at its new cupcake facility, which was installed in 2022 at a cost of Tk 6.49 crore. The facility has an annual production capacity of 79 million cupcakes and the potential to generate Tk7.60 crore in revenue.

Besides, on October 22, the company announced that it would import the 2nd High-Speed Instant Noodles Line from Japan at a cost of Tk 24.7 crore, to increase its production capacity from 8,316 to 19,008 tonnes per year.

The company, which went into operation in 1979, is the maker of popular biscuit brands such as Energy Plus, Tip, and Nutty.

The company is also a pioneer in exporting biscuits, exporting branded biscuits to at least 30 countries, including the USA, the UK, Greece, France, Cyprus, Portugal, Ghana, and Somalia.

Olympic got listed on the Dhaka Stock Exchange in 1984 and Chittagong Stock Exchange in 1996.

The company’s dividend payout ratio has risen to 77.09 per cent in FY23, up from a 3-year average of 59 per cent. This year, the company declared a 60 per cent cash dividend, marking the highest dividend yield in 15 years.

Olympic Industries shares closed at Tk 141.40 on the Dhaka bourse trading floor on Sunday.

Source: businesspostbd

Olympic

Kay & Que (Bangladesh) Ltd, a publicly traded company, has questioned the net asset value (NAV) in its latest financial report for the period 2022-23, published by an auditor.

The company claims that the NAV approved in its board meeting does not match the auditor-published financial report.

This issue came to light through the auditor’s qualified opinion, published on the Dhaka Stock Exchange (DSE) website on Thursday following a review of Kay & Que (Bangladesh) Ltd’s financial report for the year ending on June 30, 2023.

As a result, it has been mentioned that the net asset value per share (NAVPS) data has also averaged.

A qualified opinion is a statement issued after an audit, completed by a professional auditor. This suggests that the information provided is limited in scope, or the company being audited has not maintained generally accepted accounting principles.

The board meeting of the Kay & Que (Bangladesh) – held on 30 October, 2023 – has approved the financial statements of the company, and issued price sensitive information on the same day.

According to the auditor, after a board meeting, the company approved Net Asset Value (NAV) of Tk 39.18 crore and Net Asset Value per Share (NAVPS) Tk 76.13. But as per the Audited Financial Statement, the company’s NAV is Tk 39.34 crore and Net Asset Value per Share (NAVPS) is Tk 76.43.

The auditor added that the company has reported Tk 48.79 crore as property, plant, and equipment. But the disclosed amount could not be verified due to the absence of an appropriate fixed asset management system. This is a violation of the financial statement rule.

They questioned Kay & Que’s (Bangladesh) investment in shares of Central Depository Bangladesh Ltd (CDBL). The auditor says the company has shown an investment of Tk 2.23 crore in 571,182 ordinary shares of CDBL valued at Tk 39.14 per share.

As per the previous audited financial statement, the value of the shares was Tk 1.06 crore. As of June 30, 2023, investment in CDBL shares had increased by Tk 1.17 crore, which is shown as a fair value reserve.

CDBL shares are non-tradable. So the auditor was unable to verify the figure because valuation performance was not performed except net asset value (NAV) per share of CDBL in its statement of financial position as of June 30, 2022.

After paying tax, in the July-September period of FY24, Kay & Que net profits stood at Tk 4.11 lakh, and the earnings per share (EPS) stood at Tk 0.06, which is lower than Tk 0.14 in the same period of the previous year.

The company’s net asset value (NAV) per share was Tk 76.19 as of September 30, 2023, and Tk 73.96 as of September 30, 2022.

When Kay & Que was founded in 1984, it had just one functioning unit that made carbon rods. According to its 2021-22 annual report, the factory underwent extensive maintenance in 2012 as a result of a decline in production.

The carbon rod factory’s original supplier closed, making it impossible for the unit to obtain spare parts from them or from other suppliers. The management was forced to close it because the carbon rod was becoming worse in quality.

Kay & Que opened a coal tar unit in 2002. But due to the drastic fall of demand in the local market, its operation was terminated, said the financial report. It later began producing pesticides, but the business was also discontinued later.

In 2009, a CNG unit was opened. It was operational up to 2015. The company’s CNG filling and re-fueling station, however, has been operational, said the annual report. On Thursday, the company’s shares traded at Tk 200.60 per share on the Dhaka Stock Exchange.

Source: businesspostbd

KAY & QUE kay&que