Linde's dividend payout for Jan-Oct 2023 will be nine times its profit

Linde Bangladesh's stock surged more than 43 per cent to Tk 1409.4 per share on the Dhaka bourse on Thursday after the disclosure of record 1,540 per cent cash dividends for the first 10 months of 2023.
The return on investment is highest even in consideration of yearly dividends paid by the multinational company since its listing in the stock market in 1976. The company paid a 420 per cent cash dividend to shareholders for 2022.
In a stock exchange filing, Linde said it announced the dividend based on the audited financial statements for the 10 months through October last year.
Shareholders will get Tk 154 against each share while the company has reported earnings of Tk 17.25 per share. That means the company will disburse Tk 2.34 billion in dividends, which is nearly nine times the profit earned during January-October last year.
Therefore, as much as Tk 2.08 billion will come from the company's reserves or sale of its assets.
The company had Tk 5.81 billion as retained earnings as of September 2023.
Linde did not give an explanation of how it will pay more than the profit made during the period. Company secretary Abu Mohammad Nisar also declined to make any comment in this regard.
"The record interim cash dividend is somewhat surprising," said Akramul Alam, head of research at Royal Capital.
Linde declared the dividend at a time when most of the mutational companies decided to pay less than before due to the prevalent dollar crunch, he added.
Cash dividends of most multinational companies declined sharply in 2023 as they were sailing through a difficult time to remit dollars to foreign shareholders.
Salim Afzal Shawon, head of research at BRAC EPL Stock Brokerage, said Linde might provide the dividends from the fund that would come from the sale of its welding business unit.
Last month, Linde announced the sale of its welding business to American-Swedish industrial company ESAB Group.
So, said Mr Shawon, it would be a one-off payment.
Another fund manager, wishing not to be named, said that since Linde did not have significant loans to pay back it would have huge cash sitting idle after the sale of the welding business.
"With the availability of dollars, the company has decided to pay good dividends. However, I will not judge the stock by this dividend because the company will not sell part of its business every year," he added.
The multinational company's net profit plunged 66 per cent year-on-year to Tk 263 million in the 10 months through October last year.
Profit eroded due to the demerger of the welding business, lower sales and higher prices of raw materials in the international markets coupled with recent upward movement of the greenback against the taka, said the company in its earnings note.
Before deciding to sell the unit, Linde Bangladesh last year demerged the hard goods business.
The board of directors of the company has approved a share sale and purchase agreement (SPA) with ESAB Group for transfer of 138.29 million shares.
To execute the deal, Linde will have to secure shareholders' approval at an extraordinary general meeting (EGM) scheduled for Sunday.
Linde's 60 per cent annual income used to come from its hard goods business, with the rest from gas selling.
Meanwhile, the stock fell almost 37 per cent to Tk 884.10 per share on the Dhaka Stock Exchange from the withdrawal of the floor price in January to May 28 this year.
It recovered after the announcement of the record dividends, closing above the floor price on Thursday.

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