57 listed firms skip dividend payouts amid macroeconomic headwinds

Infographics: TBS

At least 57 stocks listed on the Dhaka Stock Exchange (DSE), the country's premier bourse, will not pay any dividends to investors amid worsening business conditions and a lack of distributable funds due to heavy losses, leaving shareholders empty-handed.

Among the firms, five are banks and non-bank financial institutions, and, the remaining 52 stocks are from the manufacturing sector, according to DSE data.

Around 200 listed companies have declared annual financial results for FY25, while two banks, two NBFIs, and one insurance company declared for 2024.

An analysis of the data shows that 12 of the two dozen government-owned firms failed to recommend dividends, while 13 textile companies – out of a total of 58 in the sector – also did not declare any dividends for their shareholders.

Nine firms from the engineering sector recommended zero dividends, followed by five pharmaceutical firms, five banks and NBFIs for 2024, nine firms from the power, food & allied, and information & technology sectors, and five firms from the tannery, cement, and paper sectors.

Meanwhile, 43 companies have declared dividends only for their general shareholders, meaning sponsor-directors will not receive any dividends from the distributable profits.

However, some companies have recommended minimal dividends – below 1% – to avoid being downgraded to the Z category.

Analysts and industry insiders said that over the past year, fragile macroeconomic conditions and political uncertainty have weighed on business performance. Rising production and utility costs, along with a raw material crisis, have also hurt companies.

As a result, many firms failed to post profits, with the majority seeing earnings shrink, while some slipped into the red with substantial losses. Owing to negative retained earnings, these companies were unable to pay dividends.

Govt companies on top of skipping dividends

Around one and a half dozen firms listed on the bourses are from the power sector, NBFIs, engineering, and the food allied sector. 

Three years back, the majority of government firms were profitable and used to pay dividends to their shareholders. 

But now, the situation has almost reversed as the majority of firms sank into huge losses as their business situation worsened due to failure to compete with the private sector, and other external factors like foreign currency fluctuation.

The data shows 12 firms skipped dividend pay-outs as they incurred huge losses.

Dhaka Electric Supply Company skipped paying dividends for its shareholders for consecutive fiscal years as its losses widened and pushed it to downgrade to the Z category for the first time in its history since listing in 2006.

The state-owned power distributor decided to skip dividend payments for two consecutive years – FY24 and FY25 – due to heavy losses and negative retained earnings.

Desco incurred a loss of Tk125 crore in FY25, and for the third consecutive year, with total losses exceeding Tk1,172 crore till FY25.

The skipping of dividends for Investment Corporation of Bangladesh (ICB), a state-owned investment bank, occurred for the first time in its history as it incurred Tk1,214 crore loss in FY25 amid a prolonged crisis stemming from poor investment decisions and a downturn in the capital market. 

Although previously it had paid over 10% cash dividends to its shareholders with handsome profit, it paid 2% cash dividend for FY24. 

An official of ICB told The Business Standard, "ICB is not in a position to pay any dividends to its shareholders because its financial health has gradually worsened. Despite fresh fund injections, ICB's financial health is unlikely to improve."

Power Grid Bangladesh, another government-owned firm, announced that it will not pay any dividend for FY25. 

This marks the second consecutive year the state-run company has skipped dividends, although it had paid handsome dividends for its shareholders in the previous years. 

The other government companies, which skipped dividends, are Bangladesh Services, operator of InterContinental Hotel, National Tea, Renwick Jajneswar & Co (Bd), Shyampur Sugar Mills, Usmania Glass Sheet Factory, Zeal Bangla Sugar Mills, Atlas Bangladesh, Eastern Cables and Aziz Pipes. 

13 textile sector firms also skipped dividends

The data shows that 13 textile sector firms have sipped dividends for their shareholders for FY25. 

As these firms incurred heavy losses and failed to make profit, they declared zero dividend payouts. 

Maksons Spinning Mills posted the highest Tk224 crore losses in three years in FY25.

Before the years, it regularly posted profit and dividend to its shareholders. As losses widened in FY25, it had skipped to pay dividends with the last payout being a 10% cash dividend for the year ended in June 2022.

In the last three years, it incurred a total Tk406 crore losses.

Mohd Younus Bhuiyan, chief financial officer of Maksons Spinning Mills, told this newspaper, "We have been facing difficulties in opening letters of credit to import raw materials over the past year due to banking complexities."

He said it remains operational, as the company is fulfilling some orders on a subcontracting basis.

Bashundhara Paper Mills, one of the major leaders in the paper industry, failed to declare dividends for its shareholders as its business situation worsened amid a raw materials crisis and loan burden.  

Lub-rref (Bangladesh) Ltd has suffered a dramatic financial reversal, reporting a record loss of Tk66 crore for FY25. 

Due to the losses, it failed to recommend any dividends for that year for the first time since its listing.

Owing to the local procurement by its competitor, Lub-rref fell into "unfair" competition in the domestic market. "Combined with a working capital shortage and the lack of access to bank borrowing, the once-profitable company fell into trouble," Kabir Hossain, company secretary, said.