Inflation erodes Renata’s profit despite revenue increase
An 11.49% increase in Renata Limited's revenue could not offset the onslaught of high inflation, an increasing cost of energy and borrowing, as well as foreign exchange losses.
In an unaudited financial statement, a leading drug manufacturer in the country suffered a 57% drop in its net profit in the January–March quarter.
During the quarter, its consolidated revenue was Tk844 crore, which was Tk757 crore a year ago at the same time.
Its consolidated net profit was Tk58 crore, which was Tk136 crore at the same time in the previous fiscal year.
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Company Secretary Jubayer Alam told The Business Standard, "We saw good growth in the pharma segment by 6.70%, animal health by 11.10%, and export by 60.30%."
"Despite strong revenue growth, our profit shrank due to the increased cost of goods sold," he explained.
He said that in the first nine months of the current fiscal year, the cost of goods sold has increased by 17%, mainly due to increases in raw material prices caused by global inflation amid the Russia-Ukraine conflict.
He further said the increase in fuel and power costs has added to its woes.
He assures investors that Renata continues to boast a strong financial position.
"We have Tk1,536 crore of capital work in progress relating to expansion projects, which will place the company in a strong position to boost manufacturing capacity, supporting future sales growth," he added.
At the end of the first three quarters of FY2023, its revenue stood at Tk2,439 crore, which was 6.46% higher than the previous year at the same time.
During the period, the net profit was Tk270 crore and earnings per share were Tk23.34, which were Tk411 crore and Tk35.87 respectively, a year ago.
It had paid 140% cash and 7% stock dividends to its shareholders in FY22. At present, its shares are traded at Tk1,217.90 each at the Dhaka Stock Exchange.
