Beximco's income shrinks 77pc in Q2 on demand decline

Bangladesh Export Import Company (Beximco) witnessed a 77 per cent year-on-year profit decline in the second quarter through December 2023 as its revenue fell for a weakening of local and overseas demand for its products and services.
It earned Tk 739 million in the October-December quarter, with presence in businesses tied to textiles, real estate development, construction, trading, shipping of goods across borders, food, information, communication technologies, media, financial services, and energy.
On the other hand, Beximco Pharmaceuticals maintained its profit growth by boosting sales and launching new products.
Beximco's revenue fell 54 per cent in the quarter to December last year.
It, however, performed better in the second quarter, compared to the first quarter of FY24 through September when it endured a loss of Tk 708 million.
Due to shrinking demand in the overseas and domestic markets, revenue fell drastically, which along with pricier raw materials led to the erosion of income, said the company in its earnings note.
The cost of sales, which includes the cost of raw materials, stood at Tk 10.98 billion for July-December 2023, which was 76 per cent of the sales during the period, up from 70 per cent of the revenue in the same period of the previous year.
On top of that, the price hike of gas and electricity escalated the costs of production. The sharp depreciation of the taka against the dollar and high inflation have further impacted the earnings.
The first quarter losses reduced Beximco's half-yearly profit to Tk 31 million for the six months to December last year, from Tk 6.59 billion for the same period a year earlier.
Beximco's annual profit in FY23 also tumbled 43 per cent to Tk 7.10 billion for a loss of Tk 578 million in the final quarter for the same reasons mentioned above.
The profit erosion compelled the company to cut cash dividends sharply to 10 per cent for FY23 from 30 per cent for FY22.
Beximco's stock has been languishing at the floor price of Tk 115.60 since November 2022. It is among the 12 companies whose floor price is yet to be removed.
In 2021, Beximco raised Tk 30 billion by floating asset-backed Green-Sukuk (an Islamic bond) mainly to finance two solar power projects and expansion of its textile division.
The next year, it acquired a 5.25 per cent stake in Bangladesh Shipping Corporation (BSC) at an expense of around Tk 1.18 billion.
Beximco Pharma
It registered a 10 per cent year-on-year growth in revenue to Tk 10.90 billion in October-December last year, which helped the company to achieve a 16 per cent higher profit to Tk 1.44 billion during the quarter.
Following the news, the stock rose 3 per cent to close at Tk 134.1 on Tuesday on the Dhaka Stock Exchange.
Though Beximco Pharma's focus is on the local market, it has gained a foothold in the export market too, having supplied drugs to well-regulated markets, such as the US and the EU nations.
The drug maker launched 10 new products in the six months through December and completed registration of 19 products in seven countries during the period, said the company in its earnings disclosure posted on the London Stock Exchange, where the company is listed too.
It also received approvals of the US FDA for Hydroxyzine Pamoate capsule (an antihistamine drug), and Carbidopa tablet (an anti-parkinson's drug).
The drug maker obtained product approvals from the Therapeutic Goods Administration (TGA), Australia for Mometasone nasal spray (a corticosteroid), and Hyoscine Butylbromide tablet (an antispasmodic drug) too.
"We are pleased with the underlying performance of our top and bottom lines over the period despite currency devaluation impacting the results when translated into GBP," said Ahmed Sohail Fasihur Rahman, chairman of Beximco Pharmaceuticals, in its earnings note.
Beximco Pharma's half-yearly revenue rose 12 per cent to Tk 22.06 billion for the period through December, riding on a 13 per cent rise in domestic sales and 1.7 per cent increase in export.
As a result, profit was up 13.2 per cent to Tk 3 billion in the six months through December last year.
The company's chairman said he was optimistic about a continuation of the business momentum into the second half of FY24 through delivery of high-quality, affordable medicines.

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