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Drug maker Renata earned a 34 per cent lower profit to Tk 0.56 billion in the second quarter of FY25, compared to the same quarter a year ago, as it witnessed a 10.78 per cent year-on-year jump in the cost of goods sold.
It failed to boost profit despite a 15.27 per cent year-on-year growth in revenue to Tk 10.58 billion in October-December last year.
Renata's other expenditures - administrative and selling cost and finance cost - had sharply gone up three years ago and remained high since then. This time the high cost of goods sold deepened its financial stress.
In the second quarter through December of FY25, the drug maker paid Tk 58.36 as cost of goods sold per Tk 100 revenue, more than 10 per cent up from the same period the year before.
For the rise in cost, Renata's profit margin dwindled to Tk 5.32 per Tk 100 revenue in Q2 of FY25, down from 9.28 per cent in the same quarter of FY24.
Earlier in FY21 and FY22, the profit margin was around 17 per cent. It was reduced by 6 percentage points to 11 per cent in FY23 because of a sudden jump in the selling and administrative expenditures and finance costs.
In the six months to December of FY25, revenue rose 11.7 per cent year-on-year to Tk 20.68 billion but profit fell nearly 40 per cent year-on-year to Tk 1.13 billion.
Following the latest disclosure, the share price of Renata dropped 4.54 per cent to Tk 553.20 per share on the Dhaka Stock Exchange on Sunday.
The company blames the political situation, flood and power crisis for the reduction in profit.
"The events of July 2024 leading up to the resignation of the then prime minister of Bangladesh on 5th August 2024 has taken its toll on the economy of Bangladesh."
This situation was exacerbated by floods across the country, workers' unrest in manufacturing industries and power outages across the country, said the company.
Finance cost was driven by increased loans and borrowings and the increased cost of borrowings squeezed profitability, according to the financial statement for Q2, FY25.
Recently, the company has decided to issue preferred shares to raise money for paying back bank loans so that it can bring down finance costs.
Meanwhile, the consolidated net operating cash flow per share went up to Tk 3.60 in July-December 2024 from Tk 2.80 in the same period a year earlier.
The consolidated net asset value (NAV) per share was Tk 297.23 at the end of December 2024, which was Tk 295.56 on June 30 of the year.
The company paid a 92 per cent cash dividend to shareholders for the last fiscal year, a significant increase from 62.5 per cent cash dividends paid for the year before.