Reckitt profit grows 25pc in H1

Reckitt Benckiser (Bangladesh) posted a 25 per cent growth in profit year on year in the first half of this year, thanks to a reduction in running expenses.

The UK-based multinational, which sells popular consumer products like Dettol and Harpic, made a profit of Tk 299 million during this January-June period, up from Tk 239 million in the same period last year.

The company's second-quarter profit, however, dropped less than 1.0 per cent year on year to Tk 147 million for this April-June quarter.

Following the news, Reckitt's stock price rose by Tk 30 each to Tk 4823.30 on Tuesday. Reckitt has remained the most-valued stock on the market in the past few years.

Its revenue also grew by 7.0 per cent year on year to Tk 2.68 billion in January-June while production costs rose by 4.0 per cent during the period.

Despite increased production costs, the company managed to lower operating costs by reducing administrative and marketing expenses significantly, thus helping make higher profit, said the company in its earnings note.

Administrative expenses reduced by 17 per cent to Tk 293 million in the first half through this June.

However, company secretary Md Nazmul Arefin could not be reached for comment.

Seeking anonymity, an official said the company, cut down administrative and marketing expenses significantly to keep operating costs low, which, in turn, helped its profits growth.

"The cost-cutting measure helped expand the company's operating margins despite the modest growth in revenue and gross profit," he added.

Reckitt earlier spent a lot of money on creating mass awareness of the strength of its products, but it recently slashed the spending.

Its net operating cash flow per share, however, has fallen to Tk 84.14 in the last six months from last year's Tk 145.25 for a rise in payment of suppliers and trade receivables.

One of the trusted global consumer brands in health and hygiene, Reckitt's business accelerated after Covid outbreak when the use of hygiene products shot up, with Dettol and Harpic being top-grossers.

As the pandemic waned and the Russia-Ukraine war began leading to a global economic slowdown, consumers' purchasing behaviour changed.

The demand for hygiene products diminished due to inflationary pressure squeezing people's power to purchase even essential items.

At the same time, raw materials became costlier in the global market, and taka became cheaper against dollar, thereby increasing import bills.

Bangladesh witnessed decade-high inflation at 9.94 per cent this May. In June, overall inflation went down to 9.74 per cent, still much higher than expected.

Many people shifted from branded products to non-branded ones to cope with higher living costs.

Reckitt's annual profit plummeted by 18.4 per cent to Tk 659 million as it paid 980-per cent cash dividend to shareholders for 2022, the lowest since 2018.

In 2021, the company paid the highest-ever 1650-per cent cash dividend in its history.

It disbursed highest cash dividends among listed companies for three years in a row since 2019, luring investors to its stock.

Investors knew that Reckitt's profitability was higher during Covid-19 for its top-selling hygiene products.

It resulted in the share price going through the roof to Tk 6,223 in December 2021.

Since then, the stock started to decline as the demand for hygiene products ebbed in the post-pandemic period.

Listed in 1987, Reckitt has been engaged in manufacturing and marketing household products and toiletries, pharmaceuticals and food products.

Its brands include Dettol, Finish, Lysol, Veet, Strepsils, Woolite, Vanish, Trix and Harpic.

In Bangladesh, the most popular Reckitt products are Dettol soap, Dettol liquid and Harpic.

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