Cost control boosts Unilever Consumer Care profits

Unilever Consumer Care Limited – previously operating as GlaxoSmithKline (Bangladesh) – has registered an impressive 32% year-on-year profit growth in 2023, despite a surge in its raw material and packaging costs and a drop in revenue.

At present, Unilever Consumer sells health drinks, including Horlicks and glucose, in Bangladesh as a subsidiary of Unilever.

According to a filing on the Dhaka bourse, Unilever Consumer's net profit jumped to Tk96.15 crore in 2023 from Tk73.04 crore a year earlier.

At the end of 2023, its earnings per share stood at Tk49.89, an increase from Tk37.90 a year ago.

In its statement, Unilever Consumer mentioned that despite a significant increase in raw and packing material costs and a drop in revenue, profit has improved due to efficiency in operating expenses, a significant increase in net finance income, a one-off benefit coming out of a reassessment of past liabilities and obligations, and a one-off waiver of technology and trademark royalty granted by the parent company for 2023.

Moreover, its net asset value per share surged by 40% to reach Tk122.21 in 2023, and the net operating cash flow per share stood at Tk25.43, marking an increase compared to the previous year.

The company explained that the increase in net asset value per share was attributed to a higher balance of cash and cash equivalents, coupled with a one-off benefit resulting from the reassessment of past liabilities.

Capitalising on its robust profit growth, Unilever Consumer has proposed a substantial 300% cash dividend for 2023, equating to Tk30 per share for shareholders. This dividend distribution represents 60% of the company's total profit for the year.

The company has scheduled its annual general meeting for May 14, where shareholders will have the opportunity to approve the proposed dividend and review the audited financial statements for 2023. The record date for eligibility to receive the dividend has been set for April 2.

Despite declaring a dividend, Unilever Consumer experienced a decline in its share price, closing 7.30% lower at Tk2,052.20 each on the first trading day following the announcement. Investor dissatisfaction with the company's recommendations likely contributed to the decline.

In 2020, Unilever Overseas Holdings BV acquired 82% of GlaxoSmithKline (GSK) Bangladesh Ltd.

Unilever bought 98.75 lakh shares from Setfirst Ltd, a sister concern of GSK.

Unilever bought each of the shares for Tk2,046.3 and the total value of the transaction stood at Tk2,020.75 crore.

GSK Bangladesh, which was a subsidiary of the British pharmaceutical giant GlaxoSmithKline PLC, got listed on the Dhaka Stock Exchange in 1976.

In 2023, Unilever Consumer started to use its shuttered factory in Chattogram for processing and packaging Horlicks in a bid to minimise cost. This factory was once used by GSK for pharmaceutical production.

Rather than producing Horlicks in Bangladesh, Unilever imports its raw materials in bulk from India and does the packaging here.

Earlier, the company used to process and package Horlicks by using the factories of other companies through contract manufacturing.

Back in 2018, GSK shut down its pharma plant in Bangladesh as the company was unable to do well in the country's competitive pharmaceutical industry. The company, however, decided to retain its health food business at that time.