Heidelberg cement recommends no dividend

Heidelberg Cement Bangladesh Ltd has not recommended any dividend for the first time since it began operation as a multinational company following the acquisition of a local cement plant.

In the 2019 financial year that ended on December 31, the company incurred a net loss of Tk3.30 against each share, whereas its net profit per share or EPS was Tk14.33 in the previous year.

In the 2018 financial year, the company paid 75 percent cash dividend to its shareholders. That year its net profit after tax was more than Tk80 crore. But in 2019 it incurred a net loss of Tk18.64 crore.

Company officials blamed the 5 percent minimum tax on imports of raw material imposed in the last budget for the annual loss.

Seeking anonymity, a company official told The Business Standard that last year Heidelberg Cement's tax expenses rose by around Tk47 crore, which added to its existing problems in the ongoing price war in the cement market.

The official said production cost increased, while the price of cement did not increase due to an unhealthy competition in the market. That resulted in a loss for the company.

The company refrained from paying any dividend from retained earnings this year.

Last year, it had acquired Emirates Cements Bangladesh and an adjacent small power plant for over Tk182 crore.

Besides, the company is also investing in expanding its own cement production facility near Dhaka.

"Management preferred no dividend in such a context," said the official.

The company announced May 28 as its record day for the upcoming annual general meeting called on June 24.

Meanwhile, the government reduced the minimum tax on cement raw material import from 5 percent to 3 percent at the beginning of this year. That helped Heidelberg Cement Bangladesh to book a net profit of Tk4.35 crore in the first quarter, which is still 77 percent less than that of a year ago.

Over the January-March quarter, the company's sales increased by 6 percent to Tk382.62 crore. But cost of goods sold also increased by 9 percent, and that reduced earnings per share to Tk0.77.

The company was listed in the Dhaka Stock Exchange in 1989 as Chittagong Cement Clinkers Grinder, which was later acquired by German multinational Heidelberg.

Currently, sponsors and directors hold 60.67 percent of company shares, institutional investors have 26.08 percent, foreign investors 1.11 percent and general investors hold 12.14 percent shares.

The closing price of each Heidelberg share was Tk140 at the Dhaka Stock Exchange on the last trading day – March 25. Over the previous 12 months the share's highest price was Tk385.