Walton shares sink to lowest level in three years despite profit jump

Shares of Walton Hi-Tech Industries took a big hit yesterday even though the company's profit soared in the first half of fiscal 2023-24 as finance costs fell thanks to fewer fluctuations in foreign exchange rates.

The company's profit increased to Tk 340 crore during the July-December period of the current fiscal year while it was Tk 14 crore during the same period the previous year.

But despite declaring higher profits, Walton saw its share value erode by 7.49 percent to hit a roughly three-year low of Tk 840 per unit yesterday, showed data of the Dhaka Stock Exchange (DSE).

Walton's financial statements indicate that the consumer electronics maker saw its sales decline 8.4 percent year-on-year to Tk 2,368 crore in the first six months of fiscal 2023-24.

Meanwhile, the company's net operating cash flow per share dropped to Tk 27 from Tk 61 during the corresponding period of fiscal 2022-23 as its sales proceeds fell by about 20.8 percent year-on-year to Tk 2,892 crore.

In a price sensitive disclosure on the DSE, Walton said its profits rose as finance costs were lower during the July-December period compared to months of the previous fiscal.

This was because taka, the local currency, saw less frequent devaluation against foreign currencies during the first six months of the current fiscal compared to the same period of the year prior.

Repeated currency devaluations in the first half of fiscal 2022-23 inflated finance costs at the time as Walton needs to import certain raw materials, said a top official of the company.

But as these fluctuations reduced in recent quarters, foreign exchange losses fell compared to the previous year.

Regarding the reduced sales, the official said demand for home appliances and electronics shrank due to the ongoing inflationary pressure.

So, even despite raising the price of goods, Walton saw lower sales proceeds amid a massive drop in overall sales.

"If inflationary pressure eases, then sales will rise," they added.

Walton's earnings per share (EPS) stood at Tk 11.24 yesterday while it was Tk 0.47 previously.

After offloading 1 percent of its shares in 2020, the company provided 300 percent dividend to its shareholders for fiscal 2022-23.

However, Walton's sales rose 5 percent year-on-year to Tk 1,165 crore in the October-December period of fiscal 2023-24, when its profits more than doubled to Tk 140 core.

Its finance costs dropped 22 percent year-on-year to Tk 115 crore during the period, as per the company's financial reports.

Walton's has paid-up capital of Tk 302 crore and reserves of Tk 10,016 crore, showed DSE data.