Power business helps Confidence Cement to post a profit in Q1
Its power business made a Tk29 crore profit in Q1
The power business of Confidence Cement Limited – a concern of the Chattagram-based Confidence Group – helped the company to post an overall profit in the July-September quarter of this fiscal year, despite incurring losses in its core cement business.
Its power business made a Tk29 crore profit during the period.
According to the company's unaudited financial statement, Confidence Cement incurred a loss of Tk9.49 crore, even after witnessing a 17% growth in sales to Tk77.83 crore in the first quarter.
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The company said in its financial statement, during the first quarter of the current fiscal, its cement production increased along with an increase in the raw material prices. But the company could not set its cement selling price to match its raw material cost because of intense competition in the sector.
Therefore, at the end of the first quarter, its earnings per share fell 32% to Tk2.32 due to losses from the cement business.
However, in the last fiscal year, Confidence Cement made a profit from its cement business after incurring losses for the previous three consecutive fiscals.
According to the Bangladesh Cement Manufacturers Association (BCMA), cement production depends on the price of clinker – a raw material used to produce cement. Because Bangladesh has to import clinkers, periodic fluctuations of international market prices can raise production costs.
BCMA data shows that the annual demand for cement is around 33 million tons while the capacity is 78 million tonnes in the country.
In the 2019-20 annual report, Rezaul Karim, chairman of Confidence Cement said it is going to establish a third unit with an annual production capacity of 1.5 million tonnes near Dhaka.
Confidence Cement Limited was established on 2 May 1991 and went into commercial operation in 1994. At present, the company has an annual production capacity of 12 lakh tonnes.
The company was listed on both stock exchanges in 1995 and paid a handsome dividend to shareholders each fiscal year from its investment income.
Despite the Covid-19 situation, the company recommended a 25% cash dividend to the shareholders for the last fiscal year.
From October to November, its share price fell 31% to Tk112.9 each at the Dhaka Stock Exchange. However, in December its share price rose 8% to Tk121.9. At the end of Wednesday's trading session, its share price stood at Tk121.20 per share.
