Earnings Report /
Bangladesh

Linde Bangladesh Ltd: Q3 CY22: c23% yoy decline in earnings driven by c780 bps margin contraction

  • EPS in Q3 CY22 stood at BDT 13.83 due to 23% YoY decline from BDT 17.99 in Q3 CY21.

  • Demand decline of liquid oxygen in hospitals due to COVID situation improving led to negative sales growth.

  • 781 bps YoY gross margin contraction was the major reason for the decline in earnings.

Shopnil Paul
Shopnil Paul

Research Associate

Follow
IDLC Securities
2 November 2022
Published byIDLC Securities
  • 23% yoy declined in earnings in Q3 CY22. EPS in Q3 CY22 stood at BDT 13.83 against BDT 17.99 in Q3 CY21. In the 9M CY22, LINDEBD reported EPS BDT 48.78 against BDT 59.41 in 9m CY21, implying 18% decline.

  • The quarterly sales declined by c2% YoY in Q3 CY22. The sharp decline in the demand of liquid oxygen in hospital as the COVID situation has improved was the underlying reason behind the negative sales growth.

  • 781 bps yoy gross margin contraction was the major reason for the decline in earnings. Significant devaluation of local currency which made the import cost for raw materials more expensive was the main driver for margin contraction. However, the gross margin improved by c550bps QoQ in Q3 CY22 compared to Q2 CY22 as the pricing trend of copper in the international market is showing signs of cooling off.

  • Improvement in opex to sales and effective tax rate. The opex to sales ratio of the company declined by 177 bps yoy. Moreover, the effective rate ratio declined by 182bps yoy in the quarter because of the 250bps corporate tax rate cut offered in FY23 national budget.