Crown Cement sees 8 times higher profit as interest rate, tax decrease

MI Cement Factory Ltd, widely known as Crown Cement, has bounced back strongly from the pandemic shock and reported eight times higher profit in the third quarter of this fiscal year compared to the previous year.

Crown Cement, like some other leading cement exporters of the country, made higher profit as the government implemented a single digit interest rate on loans and reduced the tax last year.

In its unaudited financial statement revealed on Tuesday, Crown Cement stated its revenue rose by 14% to Tk511.17 crore and net profit stood at Tk40.16 crore in the January-March quarter of FY21.

At the end of the first nine months of this fiscal year, its revenue stood at Tk1,219.91 crore and profit Tk70.24 crore.

The company has decided to invest Tk31 crore for installing an automatic unloading and delivery unit at Pabna, which will be complete within July this year.

The board of the company also decided to sell an old mother vessel at Tk28.50 crore.

Earlier, Crown Cement had postponed its expansion plans involving Tk600 crore due to the novel coronavirus pandemic.

Crown Cement's close competitors – such as LafargeHolcim, Heidelberg Cement and Premier Cement – have also recovered their business and posted higher growth in the third quarter of this fiscal year despite the Covid-19 pandemic.

According to the Bangladesh Cement Manufacturers Association (BCMA), cement production fell by 80% during the 66-day countrywide shutdown put in place to curb the spread of the novel coronavirus last year, but it has now returned to the normal level, thanks to a resumption of construction activities.

Even before the pandemic hit the country, the cement industry as a whole started feeling the burden of the 5% minimum tax added since July 2019.

Following a plea by the cement manufacturers to remove the minimum tax, the non-refundable advance income tax (AIT) was reduced to 3%, which was effective from 1 January, 2020.

Besides, the Bangladesh Bank set a maximum 9% interest rate on all loans since April last year. This also helped cement producers increase their profit.

Industry people said cement manufacturers have returned to the growth trajectory in the January-March period of this year.

Premier Cement witnessed a 14% growth in revenue and eight times growth in net profit during the third quarter of FY21.

Mohammed Amirul Haque, managing director of Premier Cement, told The Business Standard, "We have had such business growth because people spent more to build homes, and the government also continued to build different infrastructures."

"But now the country is facing the second wave of the coronavirus which is likely to hit the businesses in the next quarter," said Mohammed Amirul Haque, managing director of Premier Cement.

LafargeHolcim Cement's revenue grew by 23% and profit jumped by 98% in the January-March quarter of this year compared to the same quarter of the previous year.

Rajesh K Surana, chief executive officer of LafargeHolcim, said in a press release, "We have continued the journey of strong performance with a clear focus on innovation and sustainability. Our new water repellent cement and the new business channel 'direct to retail' have got off to a solid start. This is yet another manifestation of our continued endeavour in serving our customers better by realising their needs."

Heidelberg Cement reported nine times higher profit and 44% growth in revenue in the third quarter of the current fiscal year.

Md Shahidullah, vice-president of the BCMA and managing director of Metrocem Cement, told TBS the demand for cement in the local market is increasing, thanks to the various megaprojects of the government.

In February this year, the BCMA said in a statement, the import costs of cement raw materials are already 10% higher now and are on a rising trend due to the pandemic.

The local cement industry depends on imported raw materials and clinker, the key material that now costs $46 per tonne, which was $42 earlier.

"Bangladeshi companies are facing pressure to raise the prices of finished goods, but the extreme competition in the local market barely allows them to increase prices," said Alamgir Kabir, president of BCMA and the vice-chairman of top cement exporter Crown Cement.

His association has requested the government to allow them some space for profitability through rationalisation of the tax burden so that cement remains affordable to middle-income people, keeping the wheel of development rolling.

Their demand also includes eliminating double taxation and reducing import duty to Tk250 from Tk500 per tonne.