Walton profits slide despite higher sales

Walton Hi-tech Industries saw its profits drop 31 per cent year-on-year despite reporting higher sales in the first half of fiscal 2021-22 due to increased production and transport costs.

"The company's profits were impacted by higher raw material prices in the international market," said Md Rafiqul Islam, company secretary of Walton.

Besides, shipping charges rose at the same time but Walton did not update its product prices until January this year.

In addition, the recurring waves of infections sparked by different variants of the rouge virus had an adverse impact on the company's sales during peak seasons, such as Eid-ul-Adha.

The local electronics giant logged profits of Tk 446 crore in the last six months (July 21 to December 21) while it was Tk 646 crore in the same period the year before.

During this period, Walton missed out on one of its biggest sales seasons as the government had imposed measures to contain the spread of Covid-19 ahead of Eid-ul-Adha, when the company usually logs a significant portion of its annual sales.

Moreover, Walton was forced to shut down its business operations, including sales and distribution, during the strict nationwide lockdown enforced between July 23 and August 5 last year, according to the company's financial report.

However, the fact that sales saw handsome growth soon after the restrictions on public movement were relaxed gives hope for better things to come, Islam said.

Sales of Walton Hi-tech Industries grew 18 per cent year-on-year to Tk 3,152 crore in the first half of the ongoing financial year.

But in the same period, the company's cost of goods sold soared 38 per cent to Tk 2,192 crore, indicating higher raw material costs.

"As the company's product prices were also raised from January, its impact will be seen in the upcoming financials," Islam added.

Walton's exports grew substantially in the period. Its gross exports stood at Tk 123 crore in the last six months while it was Tk 29 crore in the same period the previous year.

The company's net operating cash flow fell into the negative at the same time.

"To keep our production uninterrupted in the upcoming peak seasons, we already made payments to suppliers so cash flow becomes negative," Islam said.

After news broke of the company's drop in profits, stocks of Walton Hi-tech Industries fell 3.7 per cent to hit Tk 1,090 at the Dhaka Stock Exchange yesterday.