Marico Bangladesh has declared a record 1,000 per cent interim cash dividend for the three months to June this year. This dividend payout will be the highest even when compared to yearly dividends paid by the multinational company since its 2009 listing in the stock market.
"This high dividend puts Marico's payout trend back on historical track," said Salim Afzal Shawon, head of research at BRAC EPL Stock Brokerage. Sponsor-directors have a 90 per cent stake in the company. Hence, they will get the larger chunk of the payout.
The India-based consumer goods company, whose financial year runs from April to March, paid only 200 per cent cash dividends for the year through March this year, lowest as of now.
However, for the first quarter through June this year, shareholders will get Tk 100 against each share while the company reported earnings of Tk 54.78 per share. That means Marico will have to pay additional Tk 45.22 per share from retained earnings or reserve.
Therefore, Marico will disburse Tk 3.15 billion in cash dividends after making a profit of nearly Tk 1.73 billion in April-June this year.
The company had more than Tk 9.36 billion in retained earnings as of June this year, according to its audited financial statements for the first quarter.
Marico did not explain why it is paying more than the profit earned. Company secretary Md Shahinul Islam also declined to make any comment in this regard.
Mr Shawon said cash dividends of most multinational companies had been reduced sharply last year despite healthy profits as they struggled to repatriate funds to their foreign owners due to the dollar crisis.
"The dollar liquidity situation has improved to some extent, which has encouraged them to declare high dividends this year."
What drives profit growth?
Marico, whose top selling product is coconut oil of Parachute brand, recorded a 10 per cent year-on-year growth in sales to Tk 4.36 billion in April-June this year. It secured a record quarterly profit of nearly Tk 1.73 billion in the period, up 30 per cent year-on-year.
Higher sales and increased net finance income boosted profit, said the company in its earnings note.
The net finance income climbed more than 8 times year-on-year to Tk 277 million, supported by rising deposit rates.
A decline in the prices of raw materials in the global market also helped the company's profit growth.
The cost of goods sold, which is the sum of all direct costs associated with making a product, was around 39 per cent of Marico's total sales for the latest quarter while it was 42 per cent in the same quarter a year ago.
The net operating cash flow per share of the company, an indicator that shows a company's ability to generate cash from its operations, was Tk 3.18 for April-June this year, down from Tk 51.08 for the same period last year. The low cash flow resulted from higher settlement of outstanding liabilities.
The net asset value per share, which refers to the excess of total assets over total liabilities, rose to Tk 315.42 in June this year from Tk 260.64 in March for higher retained earnings.
Following the earnings disclosure, the stock soared 3.72 per cent to Tk 2,292 per share on the Dhaka Stock Exchange on Wednesday.
Marico, which sells beauty and wellness products, started operations in Bangladesh in 2000 with its flagship brand Parachute coconut oil.
Since then, the company has expanded to more than 42 brands in 10 categories, including hair care, skincare, baby-care, hygiene, and food products.
Marico, which operates two plants in Gazipur, started production from its third factory in August last year to meet the growing demand for coconut oil and food products.
Marico set up its third manufacturing unit on a land of 10 acres by investing Tk 2.27 billion at the Bangabandhu Sheikh Mujib Shilpa Nagar in Chattogram.
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