MNCs on a roll

Among all the listed firms in Bangladesh, business of multinational companies (MNCs) has been growing steadily driven by efficiency, focus on quality and proper management of resources compared to their local counterparts.

Their sales and profit growth has been consistent almost every year and they have distributed the highest dividends to the shareholders as well.

The average sales growth of the listed MNCs was 9.41 per cent from 2015 to 2020 and the profit growth stood at 9.22 per cent, according to data compiled by UCB Asset Management.

As a result, they comfortably outpaced the listed local companies as the average sales growth of the domestic firms was 6.7 per cent whereas their profit growth dropped 1.4 per cent during the six-year period.

In 2020, all the listed companies went through upheavals due to economic pressures caused by the pandemic, but MNCs were less impacted. Profits of all the listed companies plunged 34 per cent on average in the year, while the MNCs' profits dropped only 10 per cent.

"The MNCs are managed professionally, forecast demands correctly, and maintain the supply chain for the raw materials efficiently based on research," said Shahidul Islam, chief executive officer of VIPB Asset Management.

As they maintained a good relationship with suppliers at home and abroad and are experienced in riding out difficult periods, they were able to source raw materials at a competitive price at a time when the whole world was facing another major supply chain disruption because of the Russia-Ukraine war.

One of the major characteristics of MNCs is they don't aim for short-term profits. Rather, they target long-term profit and value consumers' loyalty, paving the way for ensuring consistency in profits decades after decades.

Thanks to products, services and innovation, the customers trust MNCs most as they find them reliable.

Except for the pandemic-hit 2020, the MNCs' average sales growth was in double-digit every year during the five-year period, showed the data from UCB Asset Management.

The growth was 11 per cent, 15 per cent, 10 per cent, and 11 per cent respectively in 2016, 2017, 2018, and 2019.

The companies follow the basic thing of adding value both to their customers and shareholders, Islam said.

So, they disburse profits as much as possible, while the directors of most of the local listed companies use their clout over the companies to ensure benefit for them but they hesitate when it comes to sharing fortunes with general shareholders, Islam said. UCB Asset Management has most of its investment in multinational companies.

Only Bata Shoe and Heidelberg Cement incurred loss in 2020.

Heidelberg was in the red largely because the whole sector suffered as demand for the key construction material crashed since construction activities, at the individual, real estate and government levels, were largely suspended due to Covid-19.

The shoemaker suffered a loss of Tk 132 crore in 2020 as its retail business plunged during major festivals —Eid-ul-Fitr, Eid-ul-Azha, Puja and Pahela Baishakh — since the deadly virus kept the customers at bay. The festival sales account for 25 to 30 per cent of the company's yearly business.

Among the MNCs, Grameenphone, the largest mobile phone operator in Bangladesh, logged the highest profit of Tk 3,718 crore in 2020.

Reckitt Benckiser Bangladesh Ltd, whose popular brands include Dettol, Harpic, Mortein and Veet, disbursed the most dividend at 1,400 per cent in the year, according to the Dhaka Stock Exchange.

"Sustainable and successful business depends on having a sharp business strategy and maximising the value for all stakeholders – employees, consumers, shareholders and society," said Christabel Randolph, legal and corporate affairs director at Marico Bangladesh, the local operation of the Indian multinational consumer goods company.

Operating in multiple geographies means that MNCs can maximise the utilisation of their cross-geography learnings, skills, capabilities and technologies. They are able to track and adapt to global trends or efficiencies.

"We are, therefore, able to produce and offer world-class, quality products to consumers in Bangladesh. Using the learnings and global best practices, the MNCs are able to deliver sustainable growth from their operations in Bangladesh," Randolph said.

The focus on quality and efficient management of resources while investing in people and process capabilities in Bangladesh has been of utmost importance for MNCs, she focused.