Rising dollar price hurts Renata’s profit
Pharmaceutical company Renata Ltd witnessed a 35 per cent year-on-year drop in net profit in the October-December period due to increased price of raw material generated by the dollar crisis.
The company's turnover declined to Tk 757.6 crore in October-December period of 2022 from Tk 762.9 crore the same period a year ago.
However, its cost of sales rose by 21 per cent year-on-year to Tk 483.7 crore in the second quarter of the financial year 2022-23.
Renata posted Tk 87.8 crore in income in the second quarter to the end of December 2022 down from Tk 135.9 crore in its unaudited financial statement.
Renata's consolidated earnings per share (EPS) dipped 35 per cent to Tk 7.66 for October-December 2022, from Tk 11.89 a year ago.
With the second quarter earnings, overall earnings declined 22 per cent year-on-year to Tk 18.52 for the July-December 2022.
The profits fell due to the depreciation of the exchange rate of the local currency and a significant rise in capital and raw material costs, said Jubayer Alam, company secretary of Renata.
"These two items account for almost all the decline in net profit."
In the six months to December in 2022, the company's manufacturing costs rose by Tk 21 crore because of power and fuel price hikes while its travel and freight spending increased by more than Tk 10 crore and international freight spending by Tk 4 crore, Alam said.
Moreover, Renata increased raw materials inventory by Tk 247 crore to ensure the drugmaker's protection against dollar shortages in the near future, he said.
The stock build-up and increased expenditures as outlined earlier adversely affected Renata's cash-flow, he added.
"Despite these disappointing results, the company remained financially strong and therefore we intend to stay focused on our long-term strategic goals," he added.
Renata's share remained unchanged at Tk 1217.90 today at the Dhaka Stock Exchange.