Increased raw material cost drags down Olympic Industries’ profit
The company’s profit in the first three-quarters of the current fiscal was the lowest in the last seven fiscal years
Olympic Industries, one of the country's leading biscuit manufacturers, posted a 16% revenue growth in the July-March period of FY22, but a hike in the cost of the raw materials has hampered the company's profit growth.
In the first nine months of FY22, its net profit declined by 36% to 102.37 crores from Tk159.06 crore in the same time as the previous fiscal.
The company's profit in the first three-quarters of the current fiscal was the lowest in the last seven fiscal years as the prices of ingredients used in its products have jumped sharply in recent times.
Earlier, the company's lowest profit – Tk74.26 crore – in the first nine months of a fiscal was in FY15. During the July-March period of that fiscal, its revenue was Tk654.36 crore.
After one year, in the July-March period of FY16, the company's profit rose to Tk119.15 crore as its revenue jumped significantly.
After that, its sales and profit gradually increased over the years as the demand for its products surged, and the company expanded its production capacity to meet the growing demand.
According to the company's financials, Olympic Industries' revenue increased to Tk1,596.21 crore in the July-March period of FY22, up from Tk1,372.97 crore in the same period of FY21.
During that time, its revenue from the local sales increased by 17% to Tk1,577 crore, but that from export declined by 14% to Tk18.33 crore compared to the same time of the previous fiscal.
During the same period, the company's cost of goods sold increased by 25% compared to the same time of the previous fiscal.
The company said its cost of goods sold increased significantly due to a sharp increase in the cost of materials, especially wheat flour, sugar and edible oil.
It also said an increase in its operating expenses, mainly administrative and selling expenses, and a decrease in its other incomes, including that from export incentives and interest on fixed and short-term deposits, has caused a decline in its profit.
In the January-March quarter of FY22, the company's revenue rose by 27% to Tk561.02 crore from Tk440.03 crore, and its profit declined by 41% to Tk30.25 crore from Tk51.69 crore in the same time of the previous fiscal.
Olympic Industries is engaged in manufacturing biscuits, candies, confectionery items, and dry cell batteries for local and foreign markets.
The company's business grew significantly as demand for its biscuits and other confectionery items increased amid the pandemic, but the hike in the prices of its raw materials hindered the company's growth.
