GSK Bangladesh had a stunning turnaround in 2019
GSK Bangladesh's profits surged in 2019 even though the British multinational saw a decline in turnover thanks to the relief from incurring losses from its pharma unit.
Last year, the company's profits stood at Tk 98.57 crore in 2019, up from the Tk 63.54 crore losses it had logged in for the previous year.
This year's earnings per share stood at Tk 81.83, which is its highest yet since it got listed in the Dhaka Stock Exchange in 1976.
"The shuttering of our loss-making pharma unit has brought this result to our balance sheet," said Masud Khan, chairman of GSK Bangladesh, yesterday.
The British multinational shuttered its 60-year-old pharmaceuticals business in Bangladesh in 2018. The pharmaceuticals unit, based in Chattogram, was incurring losses in the previous five years, much to the concern of the GSK Bangladesh board. With the view to preventing any more losses, the board decided to bring down the curtains on the business.
In 2018, there were significant costs incurred for the factory closure in the form of severance pay to employees and so on, due to which the company recorded losses, Khan told The Daily Star earlier in February.
In 2019, the impact of discontinued business was minimal. And there were some cost-saving activities too, according to a posting on the DSE website by GSK Bangladesh.
In 2019, its revenues amounted to Tk 447.5 crore, down 7.1 per cent year-on-year, thanks to lower sales of Horlicks, a sweet malted milk-based beverage that has been one of the crown jewels in its portfolio since ages.
After the shutdown of its pharma unit in 2018, the company's focus turned to its consumer healthcare business, where Horlicks is its premier brand. In 2019, sales of the company's powder products, including Horlicks, dropped 11.08 per cent to Tk 404.17 crore.
Horlicks, which can be bought for as low as Tk 10 in sachets, increased its market penetration to 8.9 per cent in 2019 from 6.9 per cent in 2018.
However, the large packs of Horlicks faced a challenging market situation this year with a decline in average household consumption.
Sales of GSK Bangladesh's oral product, like Sensodyne, rose 59.75 per cent to Tk 43.31 crore.
"This year was not good for health food, but we have taken steps to ensure higher sales in the current year," Khan told The Daily Star yesterday.
Now, the company is focusing on driving penetration and distribution of its products at affordable price points such as in small packs.
GSK Bangladesh is working on bringing in new products to the market too, Khan said.
The company, after all, has no other choice if it must continue with the profit streak: on December 3, 2018, Unilever announced the purchase of 82 per cent stakes of GSK's health food and drinks business in Bangladesh for Tk 1,640 crore, as part of the Anglo-Dutch company's push to cash in on Asia's fast-growing economies.
The transaction is yet to be completed, Khan said.
But for now, the company is rewarding its shareholders generously: it is set to distribute 530 per cent cash dividend for the year ended on December 31, 2019. Some 18 per cent of the company's shares are with the public.
Stocks of the multinational company traded at Tk 2,046 on March 25, the last day of trading before it went on recess for the outbreak of coronavirus in Bangladesh.