Linde reports lowest profit in 10 quarters for Jan

May 23, 2023

FE REPORT

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Linde Bangladesh has reported the lowest profit in 10 quarters for January-March this year, mainly due to costlier raw materials.

Business has been tougher also because of the stronger dollar and a sharp decline in revenue from the healthcare segment.

Linde has reported Tk 140 million in profit in the quarter this year, the lowest since April-June 2020 when its business was hampered by the country-wide lockdown aimed at curbing the spread of Covid.

The leading medical and industrial gas producer's profit nosedived more than 51 per cent year-on-year in the first quarter of this year.

Company secretary Abu Mohammad Nisar could not be reached for comment despite repeated attempts.

Linde in a disclosure said profit had gone down mainly for lower sales and higher prices of raw materials in the global market, coupled with a sharp devaluation of the local currency against the US dollar.

The company's sales revenue dropped more than 8 per cent year-on-year to Tk 1.25 billion in the first three months this year as the demand for medical oxygen, its main product, kept falling.

Linde did good business in 2021, particularly in the medical segment, as the need for oxygen shot up to help Covid patients dealing with breathing distress in hospitals.

The demand for medical oxygen at the time jumped to 70-75 tonnes from 25-30 tonnes. As a result, the healthcare segment recorded a robust year-on-year growth of 54 per cent in 2021.

Linde's healthcare business involves medical gases, medical equipment, and medical cylinders.

As the pandemic waned and raw material prices skyrocketed due to the Russia-Ukraine war, the company's revenue from this segment fell.

Meanwhile, energy price hikes and power disruptions pushed up production costs.

Thus, the company's cost of sales rose 13 per cent year-on-year to Tk 854 million in January-March despite a sales decline.

Linde reported the lowest annual profit in six years for 2022 for the same reasons.

The shrinking profit compelled the company to cut down on annual cash dividends to shareholders to 420 per cent for 2022 from 550 per cent disbursed for 2021.

Linde Bangladesh is involved in manufacturing and supplying industrial and medical gas, welding equipment and products as well as anesthesia and ancillary equipment.

Recently, its board has decided to demerge its gas and hard goods business, which is underway.

Linde Bangladesh's 60 per cent income comes from its hard goods business with the rest from selling gas.

Listed in 1976, Linde Bangladesh's stock price has been languishing at the floor price of Tk 1397.70 since October last year.

A member of the Linde PLC, Linde has been operating in Bangladesh for more than half a century, even before independence, and has been expanding its business ever since.

Currently, Linde Bangladesh has the capacity to produce 80 tonnes of liquid air separation unit (ASU) gases per day and 23,100 tonnes of Welding Electrodes per year.

As a pioneer multinational company in the sector, it has 18 sales centres across the country, serving a customer base of over 35,000, according to its website.

Linde is the leader in the production of medical and industrial gas, occupying 90 per cent of the market share, according to EBL Securities.

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