Walton to give record dividends, buoyed by 73pc profit growth

Walton Hi-Tech Industries secured a remarkable 73 percent year-on-year growth in profit to Tk 13.57 billion in FY24, overcoming high inflation and other macroeconomic challenges.

The electronic and home appliance giant's earnings per share (EPS) jumped to Tk 44.78 in FY24 from Tk 25.84 the year before, according to the price sensitive information published on Wednesday.

Buoyed by the profit growth, the local electronic giant declared a record 350 percent cash dividend for general shareholders and a 200 percent cash dividend for sponsor-directors.

Higher sales and significantly lower finance costs, largely due to lower impact from currency devaluation against the dollar, helped the company secure a healthy profit growth, said the company in its earnings note.

The company's operating profit margin improved to 25.02 percent in FY24, compared to 23.46 percent a year ago, while the finance cost on sales dropped to 6.11 percent from 11.35 percent, said the company.

Although Walton did not publish annual net finance expenses figures, its nine-month net finance costs was Tk 2.50 billion through March this year, down from Tk 6.02 billion in the corresponding period last year.

Walton also managed to offset the cost burden partially by adjusting sales prices, which resulted in a higher profit.

The management remains optimistic about Walton's continued growth momentum, anticipating healthier profits in the years to come, supported by an ease in the dollar crisis and management efficiency.

The country's largest consumer electronic brand is yet to disclose its annual sales figures. However, its net sales grew 5 percent year-on-year to Tk 42.86 billion in the nine months through March this year, while cost of sales dropped substantially.

The net operating cash flow per share, a measure of a company's ability to generate cash from its operations, dropped to Tk 56.96 per share, down from Tk 111.84 in the previous year, mainly due to increased payment to suppliers and the government exchequer.

"These payments were necessary due to higher materials purchase and sustainable sales growth," said the company.

The net asset value after revaluation, which refers to the excess of total assets over total liabilities, reached Tk 379.3 per share as of June this year, up from Tk 343.73 in June 2023.

The company will hold an annual general meeting on October 29. The record date for the entitlement of dividends is September 30.

Industry insiders say the demand for electrical and electronic products and home appliances will rise in the near future due to affordable prices, a rapid expansion of rural power distribution networks, and the fast-growing middle-class population in Bangladesh.

Walton has become the leader in the domestic market.

Walton holds around 75 percent share of the refrigerator market and accounts for half of all television sales in Bangladesh. Alongside refrigerator, freezer, air conditioner, and television & compressor, it has branched out into manufacturing elevators.

To increase free float shares

Walton listed on the stock exchange in September 2020 by raising Tk 1 billion under the book-building method and issuing only 0.97 percent shares.

Experts have been critical about the offloading of less than 1 percent shares by Walton.

The Bangladesh Securities and Exchange Commission (BSEC) in September 2021 asked Walton to offload more shares to meet the 10 percent regulatory requirement within three years.

In May 2022, the market regulator extended the time to three years to ensure at least 10 percent free float.

To meet regulatory obligations, Walton directors gradually sold shares, taking the free float shares to 1.49 percent as of July this year.

Free float refers to the shares of a company that are available to the public for trading in the secondary market.

STOCK PERFORMANCE

Meanwhile, a high demand for Walton shares on the bourses within four months after the listing helped the stock become the second largest in terms of market cap after Grameenphone.

Walton's stock fell 2.76 percent on the Dhaka Stock Exchange to Tk 709 per share on Wednesday. It tumbled 43 percent since the floor price removal in January this year.

As a result, Walton saw its market value wiped out by Tk 99 billion since the withdrawal of the price restriction, causing it to slide from the second to the third position in terms of market capitalization.

Currently, Walton's total market value stands at Tk 220.8 billion.