Tough start to 2025 for MNCs as costs and energy shortages bite

Infographics: TBS

Most listed multinational companies (MNCs) on the Dhaka Stock Exchange (DSE) began 2025 on a weak note, reporting profit declines in the first quarter, largely due to high inflation, as well as ongoing energy and foreign exchange shortages.

According to DSE data, 10 out of the 13 listed MNCs have released their financial statements for the January–March period.

Of these, six reported a drop in profits, while two posted losses. Only two companies managed to register profit growth during the quarter.

Among the six MNCs that saw profit declines, Grameenphone reported the steepest drop at around 53%, followed by Heidelberg Materials with a 50% fall. Unilever Consumer Care's profit declined by 38%, BAT Bangladesh by 23%, Linde Bangladesh by 17%, and LafargeHolcim Bangladesh by 15%.

Meanwhile, Singer Bangladesh and RAK Ceramics posted losses in the first quarter.

Only Marico Bangladesh and Reckitt Benckiser Bangladesh managed to achieve profit growth during the period.

Bata Shoe, Berger Paints, and Robi are yet to publish their Q1 financials.

Mohammad Rehan Kabir, Head of Research at EBL Securities, told The Business Standard that the economic slowdown has dampened macroeconomic productivity, adversely affecting multinational companies.

He noted that since these firms operate across diverse sectors, the factors behind their profit declines vary significantly from one company to another.

He further noted that investors had expected interim dividends from the MNCs, but none were declared, which likely disappointed investors and contributed to the stagnant share prices.

Meanwhile, among the 10 listed MNCs, BAT Bangladesh, Grameenphone, Heidelberg Materials, Linde Bangladesh, and RAK Ceramics reported year-on-year revenue declines for the January–March quarter. 

In contrast, LafargeHolcim Bangladesh, Marico Bangladesh, Reckitt Benckiser, Singer Bangladesh, and Unilever Consumer Care posted revenue growth during the same period.

MNCs have long played a vital role in the stock market due to their resilient performance and consistent, attractive dividend payouts. As a result, investors prefer to hold these stocks in their portfolios and continue to call for more MNCs to be listed, according to market insiders.

Currently, 13 MNCs are listed on the DSE, with a combined market capitalisation of Tk1.02 lakh crore—accounting for approximately 17% of the DSE's total market cap.

Grameenphone, a mobile operator, recorded a 53% or Tk704 crore decline in net profit during the quarter. It reported a net profit of Tk633.93 crore, which was Tk1,338 crore in the previous year.

In a press release, Chief Executive Officer of Grameenphone Yasir Azman said, "Although we're still navigating through the challenges of this difficult macro environment, with the strategic measures we've put in place our financial performance is improving.

Chief Financial Officer of Grameenphone Otto Magne Risbakk said, "As anticipated last quarter, the gradual recovery of the economy is leading to a rebound in both data usage and subscriber growth. 

"On a YoY basis, we've registered a decline of 2.5% in total revenue, largely driven by cautious consumer spending."

BAT Bangladesh reported that its cigarette sales fell by 538 crore sticks between January and March compared to the same period in 2024, dragging down net revenue and profit.

After taxes, the company's net revenue dropped by Tk130 crore to Tk1,865.25 crore. Net profit dipped 23% to Tk318 crore, down from Tk413 crore last year. Earnings per share (EPS) fell accordingly to Tk5.89.

A senior researcher at an asset management company said that informal imports of cigarettes have increased in the country. As domestic cigarette prices have risen, the sale of illegally imported cigarettes has also gone up. At the same time, competitor JTI Bangladesh has seen a boost in sales. These combined factors have contributed to the decline in BAT Bangladesh's business.

For Linde Bangladesh, a multinational producer of industrial and medical gases, profit declined to Tk8.05 crore and revenue year-on-year declined by 6% to Tk55 crore.

The company said in its statement, profit declined mainly for the lower sales and higher costs due to inadequate natural gas supply and power disruptions at its Rupganj plant.

LafargeHolcim Bangladesh PLC, a frontline building material solutions provider, saw a profit decline by 16% year-on-year to Tk139 crore during the quarter, primarily attributable to elevated energy cost and softening in cement prices.

Iqbal Chowdhury, chief executive officer of LafargeHolcim Bangladesh, said, our profitability was impacted by significantly higher energy costs and a softening in cement prices, both of which weighed on our margins. We are actively pursuing cost optimisation measures and exploring strategic pricing initiatives to address these challenges.

Unilever Consumer Care posted a 38% decline in net profit to Tk13.79 crore.

In an explanation, the company said that profit decreased due to re-imposition of technology and trademark royalty by the parent company which increased operating expenses for the quarter and no one-off benefit coming out of reassessment of past liabilities and obligations. 

The magnitude of the adverse impact was mitigated partially through operating efficiency and efficient investment of cash, resulting in significantly higher net finance income, it said.

Singer Bangladesh incurred a significant loss of Tk34.89 crore. It said in the statement, the company attributed the loss to a decline in gross profit margin, caused by higher average product costs due to discounts and promotional activities, while selling prices remained unchanged. In some cases, prices were even reduced for key products to stay competitive. Additionally, changes in the product and sales channel mix further eroded margins.

Singer Bangladesh also cited a 145% surge in finance costs due to higher interest rates, and a 108% increase in income tax expenses driven by minimum tax requirements and deferred tax liabilities.

RAK Ceramics said that inadequate gas supply had severely impacted production, resulting in a net loss of Tk2.53 crore.

Sadhan Kumar Dey, chief executive officer of RAK Ceramics, said, "We have been going through a very difficult period over the past few years, mainly due to the acute gas crisis."