Olympic Industries sees fall in profitability
Profitability of Olympic Industries, the country's leading biscuit maker, dropped in the first half of the current fiscal year due to increased price of raw materials, leading to a fall in the company's share price.
Olympic's profitability compared to its sales and net profit margin dropped to 11.50 per cent in the first half while it was 13.12 per cent during the same period the year before.
As a result, the company's turnover rose 16.5 per cent to Tk 932 crore and profits increased 2 per cent to Tk 107 crore in the last six months.
Stocks of Olympic Industries fell 1.57 per cent to Tk 182.2 yesterday after the declaration of its earnings was posted on the Dhaka Stock Exchange (DSE) website.
"The cost of all our main raw materials -- oil, sugar and flour -- rose but the price of finished products remained the same and this ultimately impacted our profits," said Madad Ali Virani, executive director of operations at Olympic Industries.
"For instance, we previously bought oil for Tk 60-65 per litre from the wholesale market but now need at least Tk 95 for it," he added.
The prices of sugar and flour rose internationally and so, there was no way to avoid the price hike.
When the profit margin will be much lower and everyone faces the same heat, then the price may rise and lift up the profit margin once again, Virani added.
In the last six months, local sales of Olympic Industries rose 16 per cent to Tk 917 crore while exports rose 36.6 per cent to Tk 15 crore.
In fiscal 2019-20, biscuit shipments saw growth of 10 per cent. In the July-December period of 2020-21, biscuit exports almost doubled to $31.5 million from $16.6 million a year ago, data from the Export Promotion Bureau shows.
The local biscuit industry has expanded by about 15 per cent annually over the past few years.The market for biscuits is worth Tk 5,000 crore to Tk 6,000 crore with large and well-known brands taking up a major share, according to industry insiders.
Olympic posted a 15 per cent increase in sales to Tk 1,589 crore in fiscal 2019-20 from Tk 1,373 crore in the previous year.
The company recently decided to invest around Tk 42 crore to expand its annual production capacity by 12,442 tonnes.
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