HeidelbergCement Bangladesh snaps 5-quarter losing streak

Infographic: TBS

HeidelbergCement Bangladesh Limited has snapped a losing streak of five quarters and returned to profit in the first three months of this year.

In an unaudited financial statement, the German-based multinational cement manufacturer said it has managed to make profit as its cost of goods sold decreased by 6% and revenue increased by 5% in the first quarter.

Seeking anonymity, a senior officer of the company told The Business Standard, "Since October last year, the price of cement raw material has been falling in the global market. And since this time, the price of cement has also increased by 5-10%. It has helped us overcome losses and return to profit."

"And the breath of relief in the cement business has started since October last year. Moreover, the value of the dollar did not fluctuate much during this time," he added.

He further said that the cement industry has long been struggling to increase prices due to stiff competition, and earlier this year, they finally managed to get some better prices both from government and private sector customers.

Although in the previous quarters, the company incurred a huge loss owing to the skyrocketing prices of raw materials and foreign currency fluctuations.

During the January-March quarter, HeidelbergCement Bangladesh posted a 5% higher revenue of Tk568 crore than the previous year at the same time. Its net profit stood at Tk38.69 crore, compared to a loss of Tk16.77 crore a year ago.

It reported that earnings per share (EPS) stood at Tk6.85 at the end of March this year, which was Tk2.97 negative a year ago.

The company said in its financial statement that EPS increased mainly due to a higher net sales price, a lower cost of raw materials, and lower plant repairs and maintenance costs.

It also declared a 10% cash dividend for its shareholders for 2022, despite incurring a loss during the year.

To entitle the shareholders to the dividend, it set 22 May as the record date and 13 June for the annual general meeting to get the dividend and audited financial statement approved by its shareholders.

Earlier, in 2019, HeidelbergCement Bangladesh failed to pay a dividend for the first time since it began operation as a multinational company following the acquisition of a local cement plant.

The company got listed on the Dhaka Stock Exchange in 1989 as Chittagong Cement Clinkers Grinder, which was later acquired by HeidelbergCement.

Its share price jumped over 38% to close at Tk247.80 each in the last four days, just before the financial statement was published.

Apart from Heidelberg Cement, Premier Cement and Crown Cement also fared well in the January-March quarter of this year.

During the quarter, Premier Cement recorded a 20-time higher profit, and Crown Cement posted an 850% higher profit compared to the same period a year ago.

Premier Cement's EPS was Tk2.92 and Crown Cement's was Tk1.52, which were Tk0.14 and Tk0.91, respectively.

"Two factors together helped us recover earnings in the March quarter – the expanded capacity and some breathing space in business," Md Selim Reza, chief financial officer (CFO) of the company, earlier told TBS.

Expanded capacity, added in July last year, helped the company achieve 36% volume growth, while the price increase to cope with the surged costs helped it earn 41% higher revenue in the January-March period.

Secondly, both the long-lasting and sudden adversities in the cement business eased a bit, said Reza.

Cement consumption in the country dropped by more than 1.5% in 2022, according to the Bangladesh Cement Manufacturers Association (BCMA).

Selim Reza believes the year-on-year growth was positive in the January-March quarter this year.

But the EPS of Meghna Cement, a concern of Bashundhara Group, dropped by 91% to Tk0.04 during the quarter.