Bata Shoe has declared a 38 per cent year-on-year decline in profit for the second quarter through June on a 19 per cent plunge in sales in the quarter, compared to the same period a year ago.
An FE analysis of business performance of the multinational company points to a declining trend in profit since 2019. Since then, the company could not get back on its growth trajectory.
The shoe maker has been facing big competition over the last five to six years with local companies. Bata endured losses for two consecutive years -- 2020 and 2021 -- for the first time in its history in Bangladesh. It came out of the red in 2022. After gaining a slight growth in 2023, the company's earnings again fell this year.
Bata blames the decline in sales on the lingering adverse business climate. In the six months through June, sales plummeted more than 4 per cent to Tk 5.42 billion. In January-June this year, profit also fell 15.3 per cent to Tk 0.37 billion.
The company says inflation squeezed sales volume.
Moreover, higher operating expenses and finance costs eroded profit.
According to the company, operating expenses were up only 1 per cent in the six months through June, compared to the same period last year. Its financial statement also shows finance cost escalated by 8 times year-on-year to Tk 87.36 million in January-June this year.
Cash flow from operations also shows a downward trend. It went down 31 per cent to Tk 0.16 billion in the six months to June. According to the company, the low cash flow was driven by low turnover
and higher operating expenses during the period.
In 2023, Bata's profit was Tk 0.40 billion and declared Tk 43.5 as cash dividend per share.
Meanwhile, the stock traded at Tk 940 per share on the Dhaka stock Exchange on Wednesday, losing 0.35 per cent over the day before.
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