The dwindling demand for products amid persistent high inflation and lingering macroeconomic challenges hit the multinational companies, with sales and profit narrowing year-on-year in the nine months through September this year.
Their production costs have gone up due to higher energy prices and increased input costs, while supply-chain disruptions amid unrest and devastating floods, particularly in the third quarter, brought down sales, said industry insiders.
"The soaring inflation mainly shrank the purchasing power of customers," said Akramul Alam, head of research at Royal Capital. The stubborn inflation and the July-August political upheaval slowed down economic activities and impacted consumption patterns.
Many companies did not raise product prices proportionately with the rising production cost as that would further drive away consumers, added Mr Alam.
Higher borrowing costs due to interest rate hikes also suppressed the bottom-line growth of the multinational companies having high bank loans.
From fast-moving consumer goods producers to cement and ceramics manufacturers, all witnessed reduced sales and profitability. Telecom operators were the exceptions.
Of the 13 listed foreign companies, 10 made financial statements public for the nine months through September. Of them, profit of eight companies declined between 5 per cent and 92 per cent year-on-year in January-September this year.
Telecom operators -- Grameenphone and Robi Axiata -- managed to secure a year-on-year profit growth in the nine months to September despite adversities. They had the advantage of reduced forex losses.
Berger Paints and Marico Bangladesh's financial year runs from April to March, while Linde Bangladesh is yet to disclose third quarter's earnings.
Singer Bangladesh received a big blow, with its profit tumbling 92 per cent year-on-year in the nine months to September. The company suffered a loss of Tk 185 million in the third quarter due to lower-than-expected sales.
"The political crisis, which persisted until mid-August, combined with the devastating floods that swept across the eastern part in late August and the western part in September led to sales falling below expectations," said the company in a statement.
Bata Shoe incurred a loss of Tk 128 million in the third quarter while its nine months' profit plunged 73 per cent year-on-year because of unexpected political events in the country that impacted retail operations.
Cement maker LafargeHolcim's profit plunged 36 per cent year-on-year in the nine months, while sales slid 4 per cent year-on-year during the period as people cut unnecessary spending.
Economic challenges hurt the construction sector in the country, said Md Iqbal Chowdhury, chief executive officer of LafargeHolcim , in a statement.
The industry will face similar hurdles in the rest of the year, owing to high inflation and foreign exchange pressure, he added.
Another multinational cement maker, Heidelberg also saw 19 per cent lower sales in the nine months to September, compared to a year ago, while profit fell 18 per cent year-on-year.
RAK Ceramics, the country's largest and renowned tiles and sanitary ware maker's sales dropped 19 per cent while profit fell 25 per cent in January-September, compared to the corresponding period last year, owing to energy price hikes and increased production costs.
Unilever Consumer Care reported a 16 per cent lower profit in January-September while sales plunged at the same rate.
As household income failed to keep up with inflation, consumers' purchasing power eroded, resulting in a sharp decrease in sales volume.
"Amid the runway inflation, consumers have tightened their purse strings. They are now spending mainly on essential goods," said Mr Alam.
Consumer prices have been staying stubbornly high close to 10 per cent for more than a year.
Meanwhile, the central bank hiked its policy rate for lending to conventional banks several times over the last year to curb money supply to tame inflation.
Mr Alam expressed optimism that the multinational companies will see better results in the coming year once political stability returns.
The exchange rate has remained stable to some extent while the central bank's efforts to bring down inflation have been showing results in the past three months.
Grameenphone's nine months' profit grew 8.6 per cent while revenue registered a 2.24 percent year-on-year growth. However, its profit fell slightly in the third quarter due to unrest, internet shutdown, and floods.
"This quarter has been particularly challenging for us, testing our resilience across various fronts --- economically, politically, and through natural disasters," said Yasir Azman, chief executive officer of Grameenphone, in a statement.
Robi Axiata's nine months' revenue rose more than 2 per cent to Tk 75.95 billion while profit escalated 134 per cent, compared to the same period a year earlier due to efficient cost management and lower forex loss.
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