Walton registers loss for the first time in its history

Infographic: TBS

The rapid appreciation of the dollar against the taka has resulted in losses to Walton Hi-Tech Industries – the country's electronics and technology giant – for the first time in its history.

In the first quarter of the fiscal 2022-23, Walton incurred a loss of Tk46 crore and the earnings per share went down to -Tk1.52 from the Tk280.98 crore profit and Tk9.28 earnings per share growth in the same period last year.

The dollar exchange rate in July 2021 was Tk84.82, but it started to rise from May this year. 

In May, the price in the open market exceeded Tk100. Compared to last year, the value of the dollar rose by 27%.

This led to Walton's costs surging by seven times to Tk322.42 crore in July-September of FY23 compared to the same period a year ago. The company registered a loss, despite having an operating profit of Tk275.72 crore, a company source said.

Last fiscal year, the company's operating profit was Tk322.58 crore and cost was Tk36.76 crore.

Golam Murshed, managing director and CEO of Walton Hi-Tech Industries, told The Business Standard, that the cost of letter of credit (LC) settlement has gone up due to the rise in dollar value, with the additional cost resulting in the loss. 

Giving an example, he said, "We have done LC for the import of raw materials at the rate of Tk98 per dollar in the July-September quarter. But in the settlement, the value of the dollar stood at Tk102 taka. These differences have increased our costs."

Howlader said most of these costs are still unrealised, but were calculated as realised to reduce the impact of currency volatility in the next quarter. 

Meanwhile, the company's closest rival, multinational Singer Bangladesh, posted a loss of Tk8.50 crore in the July-September quarter.

Currently, Walton's production has also been disrupted due to the electricity crisis, further hurting business costs, officials said.

The prevailing inflation - 9% in September according to the Bangladesh Bureau of Statistics - has also hurt the purchasing power of people, affecting their consumption.

For Walton, this has resulted in falling sales, which is 14% less compared to the same period last year.

Abul Bashar Howlader, additional managing director of Walton, said people were buying less electronic products than before, while high raw material prices have also eaten into profits.

Singer, meanwhile, saw its sales rise by 13% compared to the same quarter last year.

In this regard, a source in the company said the effect of inflation on its sales was less as it had increased its instalment facility. 

Walton entered the electronics and home appliance market in 2008, when the sectors were still import-dependent. 

Currently, Walton is leading the refrigerator market with more than 72% of the market share. 

Besides, the company is doing well in televisions, air conditioners, ceiling fans, LED lights and home appliances sectors as well.

Walton began exporting refrigerators in 2011 and also exports various electronic products, including refrigerators, mobile phones, compressors and televisions, to European, Asian and African countries.