HeidelbergCement bouncing back slowly

HeidelbergCement Bangladesh, a Germany-based multinational cement manufacturer, is gradually coming back on track by overcoming the Covid-19 upshots, an unhealthy competition and higher financing costs.

During the post-shutdown period in Bangladesh, the company has witnessed a positive sign of business recovery, posting over Tk251 crore in revenue during the third quarter of this calendar year which is 42% higher than that in the second quarter.

Although it still incurred a loss of Tk2.72 crore during this period, the amount is over Tk14 crore less than the sum year-on-year.

Reduction in minimum tax (3% from 5%) on import of cement raw materials, change in market policy and decrease in production costs helped HeidelbergCement see a smaller loss during the July-September period, said a company official.

It is very difficult to make profit in the cement sector in Bangladesh because of an intense competition and policy uncertainties, he also said.

Unstable prices of clinker – the chief raw material for cement – in the international market as well as increase in dollar price in Bangladesh will not help the company maintain the low-cost production in the coming days, he further said.

Yet, HeidelbergCement is trying to maintain low-cost finance and supply chain for making profits, he added.

Another multinational company, LafargeHolcim Bangladesh Limited, posted revenue of Tk365 crore and net profit of Tk65 crore in the third quarter of this year, thanks to enhanced focus on supply chain management, contract negotiations, and improved production efficiencies.

Meanwhile, HeidelbergCement, for the first time as a multinational company after acquiring a local cement plant, did not pay any dividend for the 2019 calendar year due to the loss it suffered.

In the 2018 financial year, the company paid a 75% cash dividend to its shareholders.

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.

HeidelbergCement also decided they will merge with Emirates Cements and Emirates Power, subject to shareholders and the High Court approval.

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

Currently, sponsors and directors hold 60.67% of the company shares while institutional investors 26.08%, foreign investors 0.75% and general investors 12.50%.

The closing price of each Heidelberg share was Tk143.10 at the Dhaka Stock Exchange on Sunday. Over the previous 12 months, the share's highest price was Tk184.90.