Walton posts lower profits in Q1
Walton Hi-Tech Industries, one of the country's leading electronics producers, yesterday said its profits declined in the first quarter of the ongoing fiscal as consumers continue to spend cautiously amid the ongoing Covid-19 pandemic.
The company's earnings per share fell 12 per cent year-on-year to Tk 13.26 in the July-September period, down from Tk 15.07 in the same period a year ago, according to a posting on the Dhaka Stock Exchange website.
At the same time, Walton's net profit dropped 12 per cent year-on-year to Tk 401.71 crore.
Although the local electronics maker registered lower sales over the past few months, its share price rose to Tk 837.20 as of yesterday, a 7.5 per cent increase compared to that the day before.
"The company has the potential to recover its lost sales in the upcoming quarters if a second wave of the Covid-19 infections does not occur. If so, the stock price will go up," Rahat Ali, a stock investor, said after Walton's disclosure.
"People were reluctant to pour money into luxury products, so Walton's sales fell," he added.
The drop in sales was mostly due to a decreased demand for refrigerators and air conditioners. Sales in this segment dropped 9 per cent to Tk 1,265 crore compared to the same period the previous year, the company's financial report shows.
Both the local and international demand for these products declined because of the economic uncertainty brought about by the Covid-19 as people are now reluctant to spend big on luxury items.
And so, decreased sales were a common sight for the sector, be it in the local or international market, said Abul Bashar, additional managing director of Walton Hi-tech Industries.
Air-conditioner and refrigerator sales were hit because of a general disinclination towards cold water and air amid the ongoing crisis.
"But the situation will change once the pandemic ends," he added.
According to another senior official of the company, televisions, refrigerators, and various other electronics are not luxury products as they are all now a part of a person's daily needs.
"People wanted to stay at home throughout the quarter to avoid infection and so, our overall sales dropped," he said.
The sales of televisions, home appliances and other personal electronics rose 13.24 per cent to Tk 307 crore at the same time.
Besides, thanks to a lower tax regime, the newly listed company's cost of funds against bank loans dropped 19 per cent to Tk 35.15 crore.
"In the current quarter, both our domestic and international sales are good enough," the official said, adding that Walton faced some issues in exporting to Indian markets, but the problem would soon be resolved.
"Our exports to India will increase in the coming years," the Walton official said.
If the second wave of coronavirus comes about, Walton will try to cope with the situation and face any new challenges in innovative ways, he added.
Walton raised Tk 100 crore from the stock market this year.
Its per-share net asset value stood at Tk 278 as of September 30 while it was Tk 261 on the same date the previous year. Walton declared 200 per cent cash dividends for general investors while for directors, it would be 75 per cent for the year that ended on June 30, 2020.
While Walton posted a drop in sales, Singer Bangladesh, another listed electronics company, recorded higher profits in the first quarter.
In the July-September period, Singer's revenue was Tk 627 crore against about Tk 540 crore during the same period the previous year. Its net profit also rose to Tk 45.7 crore from Tk 43.9 crore at the same time.
Despite the turnaround though, Singer failed to recover its lost sales of the April-June quarter. Sales stood at Tk 1,226 crore in the January-September period, which was still Tk 100 crore short of that a year ago.