Olympic sales, profit jump but Bangas in loss

Olympic Industries Limited, the market leader in biscuit industry, has seen a big jump in revenue and profit amid the ongoing Covid-19 pandemic as people have mostly preferred packaged food instead of dining out.

But its peer Bangas Limited saw a drop in sales and faced losses as it failed to reduce fixed costs.

Due to the pandemic and a hike in raw materials' prices, Bangas' profit decreased by 70% in the 2019-20 fiscal year.

In continuation of the negative trend, Bangas saw its sales go down to Tk5.41 crore in the July-September quarter of FY21, which was Tk7.02 crore during the same period a year ago.

In the first quarter of this fiscal year, Bangas managed to earn a gross profit – difference between sales and the cost of goods sold – of Tk82.93 lakh, which was Tk1.91 crore a year ago.

But as the company could not reduce its fixed costs, its costs of raw materials as well as sales costs went up. It posted a quarterly loss of Tk9.02 lakh and the negative earnings per share (EPS) stood at Tk0.12.

Its profit after tax was Tk18.69 lakh and positive EPS was Tk0.25 over the July-September period of 2019.

Too much dependency on the winning product - Grand Choice - weakened Bangas' position in the market, according to analysts.

Bangas Company Secretary (current charge) Md Ekramul Haque declined to comment on the matter.

But another official of the company said, "Our sales decreased in recent quarters, but costs of raw materials and production increased. Also, sales costs went up. The unavoidable fixed cost against the drop in revenue was the reason behind losses."

Bangas produces sweet and salted biscuits as well as bread. It got listed on the stock exchanges in 1984.

Its products include Pineapple, Grand Choice, Evening Touch, Lovely, Wonder, Glucose, and Lexus biscuits. It produces five tonnes of biscuits and five tonnes of bread every day.

On the other hand, in the first quarter of FY21, Olympic Industries saw a 17.54% rise in revenue and its net profit grew by 2.24%.

It made a profit of Tk57 crore and EPS stood at Tk2.85, which were Tk55.75 crore and Tk2.79 respectively in the same period of the previous fiscal year.

Company Secretary Md Nazimuddin told The Business Standard, "I think there are two reasons for the increase in revenue and profits. One is the good quality of our products and the other is the pandemic."

"Because of the pandemic, people are avoiding eating in restaurants and are preferring branded biscuits as alternatives. As a result, our revenue and profit increased. To meet customers' demand, we also expanded our business and production capacity."

Olympic Industries is the largest manufacturer of biscuits in Bangladesh. Biscuits and confectionery products contribute to 95% of its annual revenue.

According to Bangladesh Auto Biscuits and Bread Manufacturers Association, the country's biscuit and confectionery market grows by around Tk6,000 crore a year.

Haque, Al-Amin and Danish have a 5% market share each, followed by Bangas, Romania, Deco, Globe, Fu-Wang, Banoful, Kishwan, Thai Food, Bengal, Gold Mark, Masafi, and New Olympia, each having a 2-3% stake.

Other companies, including Ifad, Cocola, Reedisha, Pinnacle, Kakoli, Shifa, and Kohinoor Industry, have also occupied a sizable portion of the market.