Unilever Consumer Care has kept aside nearly half of its profit made in 2022 and the other half will be distributed to shareholders in cash dividends for the year.
It, however, gave out almost 100 per cent of its profits gained in previous years.
For example, it made a profit of Tk 527 million in 2021 and distributed Tk 530 million in dividends. The year before, the multinational consumer goods company gave Tk 529 million out of Tk 530 million profits in cash dividends.
The 2022 was a year full of unexpected crises, which are not over yet, and it is difficult to predict what else may happen and what not in the greater remaining part of this year.
So, in order to minimize financial risks, Unilever Consumer Care has set some cash aside.
The company reported a profit of Tk 730.49 million for 2022, and in a disclosure it said it would distribute 360 million in cash plus stock dividends.
The move by Unilever Consumer Care is not unique. Some other multinational companies (MNCs) also felt threatened by uncertainties in business and took a similar stance.
Berger Paints Bangladesh reserved 63.5 per cent of its 2022 profit.
Reckitt Benckiser has decided to distribute 70 per cent or Tk 463 million of its profit made in 2022. The previous year, 96 per cent of its profit went to shareholders in the form of dividends.
The company recommended 980 per cent cash dividend for 2022 while the figure was 1650 per cent a year earlier. Investors will receive less for 2022 despite the fact that Reckitt's profit went higher this year.
Why such a cautionary move
Unilever Consumer Care reported that its profit grew in 2022 even after a decline in revenue only because of a one-off benefit.
The products that the company sells "are good for health but are not essential", said Masud Khan, chairman of the company.
At a time when people are under mounting pressure of higher expenses of living, education and healthcare, they would cut down spending on items that are not so necessary, the reason why Unilever Consumer Care saw its revenue fall.
Many listed multinational companies have been pondering on how to tackle current and future business under the persistent economic stress rendered by raging inflation, said Mr Khan.
The move was taken to "overcome possible uncertainties", he added.
Berger Managing Director Rupali Chowdhury said, "The cautionary stance is temporary and we hope the situation will improve."
What to do with cash reserved
Mr Khan thinks the economic distress in Bangladesh will linger until there is any change in the global scenario. Investors will get dividends out of the retained income when the crisis is over.
And the money that will be put in use as working capital will boost companies' profitability, resulting in higher returns for investors, Mr Khan said.
Examples are also there where foreign companies failed to sent dividends to their overseas shareholders due to the dollar crunch.
In November 2022, Marico Bangladesh received regulatory approval to use the money, which would have been distributed to overseas investors, as working capital.
Exceptions
Some MNCs saw a decline in profits amid the ongoing economic tension. SINGER Bangladesh is one of those, which witnessed a whopping 86 per cent fall in profit to Tk 73 million in 2022.
The slowing down business has made the company to reduce cash dividend from 60 per cent for 2021 to 10 per cent for 2022.
However, the top mobile operator, Grameenphone remains consistent; it recommended 220 per cent cash dividend to shareholders in paying out 98.72 per cent of the profit earned in 2022.
Robi Axiata and LafargeHolcim Bangladesh will distribute more than their profits for 2022 in cash dividends. The additional money will come from their reserve.
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