• Wednesday, Aug 17, 2022
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Further sign of economic recovery: ACI sees back-to-back profitable quarters

  • Published at 12:59 am January 29th, 2021

The company had seven consecutive quarters of losses until it broke the duck in the July-September quarter

Advanced Chemical Industries (ACI), one of the largest business conglomerates in Bangladesh, appears to have finally turned a corner.

The company, whose concerns range from fast-moving consumer goods to pharmaceuticals, farm machinery to fertilisers, automobiles to home appliances, supermarket to animal health products, had seven consecutive quarters of losses until it broke the duck in the July-September quarter of last year.

And it was in the green in the following quarter, too.

Between October and December, ACI posted a profit of about Tk 12 crore in contrast to a loss of Tk 42.7 crore a year earlier as the improved efficiency in operations is appearing to bear fruit.

The return of purchasing capacity of the country’s burgeoning middle-class, ACI’s target demographic, with the recovering economy also helped matters.

During the quarter, the company, which manufactures the Savlon brand antiseptic and disinfectant products in Bangladesh, logged in sales of Tk 1,914 crore, up about 8.3 per cent year-on-year.

The higher sales volume was due to public demand, Pradip Kar Chowdhury, chief financial officer of ACI, told Dhaka Tribune. 

Although Chowdhury declined to give a breakdown of the company’ssales, it can be assumed that its Savlon-branded products contributed a fair share given the heightened hygiene practice for the global coronavirus pandemic.

ACI’s competitor in the hygiene product market, Reckitt Benckiser, the maker of Dettol and Lysol disinfectants, saw its sales soar on the back of the public health crisis.

The quarter’s takings take ACI’s profit in the first half of the 2020-21 financial year, which runs from July to June, to Tk 16 crore.

A year earlier, it had posted losses amounting to Tk 81.8 crore.

Minimising financial cost, especially the single-digit interest rate on bank loans, helped bring down costs by about 50 per cent, Chowdhury said, adding that the other management costs were alsoreduced during the period.

Shares of ACI, which was listed in 1976, gained about 34.7 per cent in 2020. On Thursday, they closed slightly higher at Tk 257.1.

Analysts and stockbrokers said requesting anonymity that ACI's supermarket chain ‘Shwapno’ has been a loss-making concern since its inception in 2018, dragging down its parent company’s financial performance. 

For instance, in the 2017-18 financial year, Shwapno incurred a loss of Tk 135 crore.

ACI officials though blame the losses on its high debt servicing obligations.

However, ACI’s half-year result did paint a somewhat rosierpicture: its cash flow has improved although it is very much in the negative territory.

The company said its cash flow at the end of 2020 was Tk 165.1 crore in the negative in contrast to Tk 265.9 crore in the negative due to “high consumption of working capital for inventory build-up to cater to further demand”.