Beacon Pharma sees slower profit growth in Q2 on higher costs
FE REPORT | Tuesday, 30 January 2024
Beacon Pharmaceutical's profit growth slowed down year-on-year in October-December 2023, despite a higher sales growth, owing to a rise in operating expenses and finance cost.
The drug maker's profit growth decelerated to 2.96 per cent between the second quarter of FY23 and FY24 from a 50.8 per cent growth between Q2 FY22 and Q2 FY23.
The growth was higher in October-December FY23 for a 20 per cent year-on-year reduction in administrative cost, while the cost of sales remained the same compared to the same period of the previous fiscal year.
The company's profit growth was a staggering 62 per cent even in the immediate past quarter (July-September) of FY23.
The growth has slowed in FY24 mainly because of the surge in borrowing cost following interest rate hikes.
Currently, Beacon Pharma has short-term loans of Tk 7.59 billion and long-term loans of Tk 1.96 billion, according to its financial statement published on Monday.
As the interest rate is going up the company pays back more against the credits. At the same time, administrative and other expenses were higher in the second quarter of FY24, compared to the cost a year earlier.
In October-December FY24, sales soared 27 per cent year-on-year to Tk 2.78 billion.
The cost of sales, which includes the cost of raw materials, was Tk 1.32 billion in Q2 FY24, which was 47 per cent of the sales revenue, down from 50 per cent of the revenue in the same quarter of the previous year.
However, finance costs jumped 356 per cent year-on-year in the quarter through December 2023 and operating expenses rose 42 per cent.
The company hopes it will be able to secure a higher profit in the coming quarters, said an official wishing not to be named.
He said the company was striving to minimize costs as much as possible under the prevailing circumstances and focusing on boosting sales to offset the erosion in the profit margin.
Meanwhile, its half-yearly profit grew at 26 per cent year-on-year to Tk 752 million in July-December last year, supported by a 21 per cent revenue growth during the period.
Following the earnings disclosure on Monday, the stock of the drug manufacturer rose 0.75 per cent to close at Tk 227.50 per share on the Dhaka Stock Exchange (DSE).