High cost, strong dollar drag down Linde BD’s annual profit

Linde Bangladesh (BD) Limited has reported a 28% year-on-year decline in its annual profit for 2022, owing to high production costs and the appreciation of the dollar against the taka.

Its net profit stood at Tk88.33 crore, down from Tk122.58 crore in the previous year.

In the tough year of a slump in construction and industrial production, the company's earnings per share dropped to Tk58.04 from Tk80.55 in 2021.

At the end of 2022, its net asset value per share stood at Tk397.44.

But despite a profit decline, the company recommended a 420% cash dividend for 2022. To secure shareholders' approval of the dividend, Linde BD will hold an annual general meeting on 11 May. The record date has been set on 2 April.

On Monday, the company published its financials for 2022 on the Dhaka Stock Exchange (DSE) website. But it did not say exactly why its profit dropped by 28% in 2022. Also, The Business Standard tried to contact Saika Majed, assistant director of the human resources department at Linde BD, for comments, but she did not answer the calls.

Linde BD manufactures industrial and medical gases, welding equipment, anaesthesia products, and ancillary equipment.

It also earns from renting out cylinders used by customers and from vacuum-insulated evaporators installed at customers' premises.

The company earned over 60% annually from its hard goods business, and the rest from selling gas.

In the first nine months of 2022, its profit dropped by 17.88% compared to the same period of the previous year.

Earlier, Md Anisuzzaman, chief financial officer (CFO) at Linde BD, told The Business Standard, "Due to volatility in the foreign exchange market, the company's profit decreased. The dollar rate has exceeded Tk100, from Tk84 in the import of raw materials. As a result, the profit margin has decreased because of an increase in costs."

The CFO said during the Covid-19 pandemic, the demand for medical oxygen in hospitals increased drastically. That's when Linde BD did good business in its medical oxygen segment. But the company's revenue from this segment declined due to lower demand for medical oxygen following the improvement in the Covid situation.

"As a result, among the three revenue segments of the company, the industrial gas and hard goods segments have seen good growth," he added.

Md Anisuzzaman said, "Forex market volatility coupled with diesel prices and power disruptions have increased costs for the company. As the cost of importing raw materials has increased, the cost of distribution of products has also increased."

Meanwhile, Linde BD has also decided to demerge its medical and industrial gas businesses and the hard goods business.

If approved by the High Court, shareholders, and relevant regulators, the hard goods business – which mainly manufactures and sells welding electrode rods – will go under a separate subsidiary company, which is expected to bring much-needed diversity to the product range, the company said in its DSE disclosure on Monday.