Unilever Consumer’s profit rises despite sales drop

Unilever Consumer Care, a subsidiary of Unilever Bangladesh Limited, logged profits in January-March of 2024 even though it posted 13 percent lower sales amid subdued consumption caused by lingering higher inflation.

The manufacturer of Horlicks, Maltova and Boost reported sales of Tk 93.98 crore in the first quarter of the year, down from Tk 108 crore in the identical quarter of 2023, according to the financial reports.

Although the sales dipped, profits rose 11 percent year-on-year to Tk 22 crore in the three months to March. Thus, earnings per share improved to Tk 11.61 from Tk 10.45 a year ago.

The sales decline is in line with the trend it witnessed in the entire 2023 when the topline dropped 3 percent year-on-year to Tk 395 crore amid persistently higher consumer prices.

As household income failed to keep pace with inflation, consumers' purchasing power eroded, resulting in sharp volume declines in the health food drink market, said Khan Salahuddin Mohammad Minhaj, managing director and CEO of Unilever Consumer Care, in the annual report for 2023.

Inflation in Bangladesh has stayed above 9 percent for nearly two years.

The soaring prices of essential imports like crude oil, food grains, and fertilisers compounded by higher inflation and depleted foreign reserves triggered the currency devaluation in the country.

The taka suffered a 20 percent decline against the US dollar in 2023, posing significant challenges for businesses like Unilever in maximising production capacity and supply chains, Minhaj added.

When contacted yesterday, Unilever Consumer Care said the country has witnessed an unprecedented rise in both general and food inflation since last year. Such an inflationary environment puts pressure on consumer wallets and they prioritise spending.

As a result, the company has seen the overall malt-based drink market, and consequently, Horlicks, de-grow in the first quarter, it said.

It said operating costs were reduced due to efficiency and optimisation through aggressive savings initiatives across all business areas. Moreover, in 2023, there was a one-off waiver of technology and trademark royalty fees by the parent company.

"This also helped in significantly reducing operating expenses in 2023."

Unilever Consumer Care was previously known as GlaxoSmithKline Bangladesh Limited, which was incorporated in 1974. Its 81.98 percent shares were acquired by Unilever Overseas Holdings in 2020. Consequently, the company has become a subsidiary of Unilever Overseas Holdings BV.

Unilever Consumer Care's paid-up capital is Tk 19 crore and it provided a 300 percent cash dividend for its shareholders for 2023, which was 240 percent in the previous year.

The company's stocks dropped 2 percent to Tk 1,862 on the Dhaka Stock Exchange yesterday.