Walton's FY23 profit lowest since listing, on high forex loss, production cost

The dollar gaining strength and runaway inflation coupled with costlier raw materials dragged the annual profit of the electronic giant -- Walton Hi-Tech Industries -- to its lowest in FY23 since listing in 2020.
The most-valued local company in terms of market-capitalisation reported a 36 per cent year-on-year decline in profit to Tk 7.83 billion for FY23.
The earnings per share (EPS) went down to Tk 25.84 for FY23 from Tk 40.16 for the year before.
Profit dropped due to a vulnerable global market situation and significant local currency devaluation against the dollar, according to the company's earnings notes.
The taka has lost its value by more than 25 per cent since the Russia-Ukraine war began in February last year, making imports of raw materials expensive.
Despite the fall in profit, the board of directors declared 300 per cent cash dividend for the year for general shareholders, the highest since the 2020 listing, while 90 per cent cash dividend for sponsor-directors.
The company said raging inflation had squeezed consumers' purchasing power too, adversely influencing the overall profitability.
Walton is yet to disclose the annual sales revenue for FY23. However, its nine months' revenue was Tk 40.89 billion through March this year, 24 per cent lower from the same period a year ago.
The costlier dollar played a major role in driving up production costs, eventually shrinking the company's profit.
The company, however, performed better in the third quarter of FY23, compared to the previous two quarters, as global market conditions eased to some extent.
It had gone into the red in the first quarter (Q1) through September of FY23, enduring a loss of Tk 461 million. In the second quarter, it managed to make a profit of Tk 606 million.
Eventually, Walton's nine-month combined profit nosedived almost 70 per cent year-on-year to Tk 2.50 billion.
It reported a profit of 5.33 billion in the fourth quarter.
Due to the sharp devaluation of the local currency, the company's net finance cost itself soared 324 per cent year-on-year to Tk 6.02 billion in the nine months through March.
The company suffered foreign currency losses amounting to Tk 4.69 billion in FY23, a 54 per cent up from the year before.
Industry insiders say the demand for electrical and electronic products and home appliances will rise in the near future due to affordable prices, a rapid expansion of rural power distribution networks, and the fast-growing middle-class population in Bangladesh.
Walton has become the leader in the domestic market.
There is a high possibility of the company expanding its market share in the days to come, given the demographic and socio-economic factors, Walton said on its website.
Walton Hi-tech was listed in the Dhaka Stock Exchange in September 2020 by raising Tk 1 billion and issuing only 0.97 per cent shares.
The leader in the country's refrigerator market is emerging as one of the top manufacturers of modern electronic goods, targeting both local and international market.
A high demand for its shares in the bourses within four months after the listing helped the company become the second largest listed firm after Grameenphone.
Currently, Walton's total market value stands at Tk 317 billion, while GP's at Tk 387 billion.
Experts have been critical about the offloading of less than 1 per cent shares by Walton. The Bangladesh Securities and Exchange Commission (BSEC) asked the company to offload more shares to meet the 10 per cent regulatory requirement.
The company sought time up to three years to comply with the order by offloading shares in phases.
Meanwhile, Walton's sponsor director SM Ashraful Alam sold 425,000 shares in five phases since August last year, worth more than Tk 445 million, in the secondary market to increase free float shares.
Walton's share price has remained stuck at the floor -- Tk 1047.70 -- since September last year.
Having set up its first compressor manufacturing plant in 2017, Walton now exports refrigerators to many countries. It has reached as many as 40 countries with different products.
Walton holds 75 per cent share of the refrigerator market and accounts for half of all television sales in Bangladesh. Alongside refrigerator, freezer, air conditioner, and television & compressor, it has branched out into manufacturing elevators.
Last year, Walton won a bid to acquire three European brands and the trademark and branding rights in 57 countries, beating two renowned companies.
Walton looks to expand its compressor production capacity to 4.8 million per year, which will earn the company a significant market share in Europe and other markets around the globe.
The company set an annual general meeting on October 29 and the record date for entitlement of dividend is October 2.

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