ACI Limited has posted a net profit in the July-September period of the current fiscal year after seven consecutive loss-making quarters, offering a breathing space to its shareholders.
The listed company has disclosed Tk4 crore in net profit in Q1 FY21, putting the brakes on a series of quarterly losses. ACI suffered an annual loss of more than Tk100 crore in fiscal 2019-20.
Pradip Kar Chowdhury, executive director and chief financial officer at ACI, attributed this turnaround to four factors – growth in overall sales, cost contention, a reduction in interest expense and a boost in employees' morale amid the pandemic.
The conglomerate's three business divisions – food, plastics, animal health – have come out of losses in the latest quarter, while consumer brands' division is knocking at the breakeven door and the retail chain shop, Shwapno, has also managed to reduce its losses.
"Since the fourth quarter of the last fiscal year, we have been containing some operating costs, while during the pandemic, most business divisions did well as a large number of products from the ACI portfolio, including pharmaceuticals, hygiene products, consumer products, and agricultural ones, saw an increased demand," said Pradip Kar, a chartered accountant.
The overall supply chain disruption hindered the sales growth of a large number of products in the pandemic situation despite a spike in demand, he added.
Motorcycles are one of them, said Dr FH Ansarey, another executive director of ACI, heading the agricultural and automobile division of the conglomerate having over a dozen subsidiaries.
"Almost all of our products saw higher demand even during the pandemic," added Ansarey.
The company's consolidated revenue in the first quarter jumped to over Tk1,823 crore – a 16% year-on-year growth.
To achieve the sales growth, the company contained the rise of its operating expenses within 3%.
Along with an 11% growth in gross profit that helped the company post a quarterly profit before tax of Tk39 crore against a loss of over Tk20 crore a year ago.
Meanwhile, at the end of September, ACI's total bank loan, including that of its subsidiaries, rose to over Tk4,300 crore, which was 5% up from a year ago.
A year ago, ACI was paying 11% interest on an average against its bank loans and that has come down to 8.2% now, informed the company's chief financial officer.
It helped the company save a lot in financial costs – down to Tk92 crore in the July-September quarter from over Tk104 crore at the same period in 2019.
Finally, paying all the taxes, the company made Tk9.7 crore in total profit after taxes.
Discarding non-controlling interest at the subsidiaries, the listed company registered a consolidated net profit of Tk4.03 crore, resulting in positive earnings per share of Tk1.69 for the first quarter against loss per share of Tk5.21 over the same quarter a year ago.
Pradip Kar Chowdhury said the positive trend began in the April-June quarter when the company recorded a positive sales growth and made a profit before tax, but due to various tax expenditures, especially the minimum taxes on turnover, it ended with minor net losses in the fourth quarter.
"However, cost control never translated into any pay or job cut at ACI during the pandemic. Instead, the company rewarded its employees with a moderate pay hike after the shutdown, which boosted employees' morale. They worked hard to serve better, boost sales and help the turnaround in the first quarter," he added.
ACI has been increasingly engaged in activities to uphold its corporate social responsibility as a top corporate citizen of the country, he said.
Despite the incurring annual loss of Tk18.45 against each share, at the board meeting on Monday, ACI directors decided for 80% cash and 10% stock dividends for the latest fiscal year as the company has sufficient accumulated profits.
ACI shares at the Dhaka Stock Exchange gained 2.4% on Tuesday to close at Tk260. The price went below Tk170 earlier this year, reflecting investors' frustration.
ACI Ltd, a legacy of British multinational Imperial Chemical Industries, came under the control of local entrepreneurs in 1992 following a divestment. It was renamed ACI Ltd from ICI Bangladesh Ltd.
Beginning with pharmaceuticals, ACI gradually expanded its business into dozens of fields. Now, the conglomerate produces over 5,000 products with the help of a workforce of around 10,000 people.
The company was listed on the stock market in 1976.