Olympic Industries Ltd., one of the top biscuit and snacks manufacturers in the country has posted outstanding growth during H1’22-23. Despite the adverse macro-economic Olympic’s sales grew by 32.1% YoY to Tk 13,673.6 Mn. It is a commendable performance by the company where most consumers of Bangladesh are spending less due to the inflationary pressure on essential items.
The domestic operation which contributes to about 99% of the total sales grew by 32.3% YoY to Tk 13,529.7 Mn in H1’22-23. Export grew by 14.0% to Tk 144.4 Mn.
Most importantly Olympic Industries have been able to increase gross profit margins in a period where most of the commodity prices were volatile. The value of wheat which is one of the key ingredients for biscuit manufacturing became very volatile during the start of the Russia-Ukraine war and continued its upward price trend till June’22. However, since then the price stabilized but still is higher than it was in 2021. So it is a surprise that the company was able to increase its gross margin to 25.1% from 24.0%.
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According to the statement in the financial report, the company was able to increase the gross profit margin due to efficient management of raw materials and changes in the sales mix.
But the main reason behind the increase in gross profit margin was mainly due to adopting shrinkflation strategy. Instead of driving up the prices of Tk 5, 10, 20, 50, etc., the company reduced the size (weight) of those packs in order to meet the desired margin. The company mentioned in its FY 21-22 annual report that in some instances they had to change the size of the biscuit itself to meet the pack size or format specifications.
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The company was also effective in reducing its administrative expenses by 17.2% compared to the same period last year which resulted in an increase of 55.6% in operating profit in H1’22-23.
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