Bata Shoe back to profits after two years of losses

Bata Shoe, the country's leading branded footwear manufacturer, posted a profit in 2022 after two consecutive years of losses due to the Covid-19 pandemic. 

However, the profit growth of the multinational footwear manufacturer was held back by the depreciation of the taka, preventing it from reaching its expected level.

Despite these challenges, Bata Shoe's earnings per share (EPS) stood at Tk29.98 by the end of 2022, which were per share losses of Tk5.01 and Tk96.94 in the previous two years, respectively.

The company has officially disclosed its audited financial results for 2022 on its website on Thursday evening.

According to stock market analysts, despite no Covid restrictions in 2022 as compared to 2020 and 2021, Bata Shoe's performance was not stable. This is because the record depreciation of the taka against the US dollar has been ongoing since February of last year, causing the company to incur losses during the July-September quarter. 

Due to this, the company has not yet reached the pre-Covid situation.

Bata Shoe only had a good business performance during the April-June quarter of 2022. During that time, the company earned a double-digit EPS. In the other two quarters, the EPS was single-digit.

The multinational shoe maker, for the first time in its six decades of operations in Bangladesh, had faced drastic losses in 2020 when its annual sales dropped by 41% due to a nationwide shutdown and a prolonged homestay of the masses.

Again in 2021, recurring Covid-19 waves ate into the company's major sales as the two Eid festivals, that contribute to more than one-third of Bata's annual sales, were lost to lockdowns.

However, since there were no restrictions in 2022, the company was able to conduct full business during the Eid festivals. As a result, the company's revenue has increased. However, due to the increase in business costs, the profit margin decreased.

On the other hand, Bata's nearest competitor Apex Footwear's revenue grew by 42% to Tk800 crore year-on-year in the first half of FY23. Its net profit also jumped by 42% to Tk6.77 crore during the corresponding period.

Apex Footwear explained that the net profit has increased as its export sales as well as local sales increased to a good extent compared with the same period of last year even after increasing most of the expenses including TDS (tax deducted at source) on export collections.

Besides, Bata Shoe board has recommended a 105% cash dividend as final to its shareholders for 2022, where it had earlier paid a 260% cash dividend as interim for the period of the first three quarters.

The total dividend stood at 365% cash dividend, which will be the highest payout in its history.

For the year, Bata shareholders in Bangladesh are getting Tk36.50 cash as dividends against each share having a face value of Tk10.

This means that the company is giving more than 18% of its total profit as dividends to shareholders. Therefore, the remaining money will be given to the company as retained earnings.

At the end of September last year, its retained earnings were Tk344 crore.
Its shares closed at Tk974.80 on Thursday on the Dhaka Stock Exchange (DSE), although the company's share price had decreased by 1.26% on the day.

In the past year, the company's highest share price was Tk1,056 and the lowest was Tk871.90.

Bata has been serving the Bangladesh market since 1962 and the very company Bata Shoe Bangladesh was incorporated in 1972 following the independence of the country.

It is one of the operating companies of the worldwide Bata Shoe Organisation (BSO) and a subsidiary of Bafin BV in the Netherlands holding 70% of the company's shares. Among the local investors, institutions have 19.96%, foreign 1.35% and the general investors have 8.69% shares of the company.