The company says the slump in profit was due to lower sales caused by raw material supply shortage due to the pandemic
Unilever Consumer Care, a subsidiary of Unilever Bangladesh that manufactures health food drinks, saw its profit drop a staggering46.3 per cent to Tk 53.9 crore in 2020 at a time when there was a big boom in nutrition awareness among consumers desperately seeking ways to strengthen the body’s immunity.
Over in neighbouring India, Horlicks, the flagship product of Unilever Consumer Care, saw its sales soar amid the pandemic as panic-struck consumers ramped up its consumption hoping to shore up the body’s defences and guard against viruses, though the brand madeno claims that intake of the century-old beverage would help fight the coronavirus.
The company says the slump in profit was due to lower sales caused by raw material supply shortage due to the pandemic, which had brought cross-border movement to a standstill.
“Our sales drop was because of a supply constraint and not a slump in demand,” Masud Khan, chairman of Unilever Consumer Care, told Dhaka Tribune.
The company managed with the inventory of raw materials and finished product it had during the thick of the pandemic, which is from March to September of last year.
By September, the inventory had run out.
“The factory in India from where we get our raw materials from was shut for some time,” Khan said, adding that when it resumed operations it could not supply even 50 per cent of Unilever Consumer Care’s demand.
There was a cost-push factor too behind the lower profit, he said.
The key raw material prices went up and the duty on dry mix ingredients was hiked from 15 per cent to 25 per cent in the last budget, according to Khan.
This partly offset the savings from marketing and operational expenses, the company said.
The lower profit and the higher tax payment offset the higher interest received, resulting in a 44 per cent drop in cash flow.
Regardless, Unilever Consumer Care announced a 440 per cent cash dividend for its 2020 financial year, down from 530 per cent in the previous two years.
In June last year, Unilever acquired about 82 per cent stakes in GlaxoSmithKline (GSK) Bangladesh, which has been listed with the bourses since 1976, from Setfirst for Tk 2,020.8 crore, making it the largest transaction by a single company on the Dhaka bourse.
Under the acquisition, Unilever got the ownership of GSK’s iconic health food and drinks (HFD) portfolio brands including Horlicks, Boost and Glaxose-D.
The acquisition though came under the scanner of the Bangladesh Securities and Exchange Commission five months later, which raised issues about GSK Bangladesh’s name change to Unilever Consumer Care in July, along with other matters.
This name change, which took place on November 29 last year, confused uninformed retail investors, who jumped to snap up shares of Unilever Consumer Care, sending its price soaring.
Since November 29, shares of Unilever Consumer Case gained 39.1 per cent. On Sunday, they closed at Tk 3,139.