Home ›› 24 Feb 2023 ›› Stock
A staggering hike in raw materials prices, the steep devaluation of the local currency against the US dollar, and a prodigious hike in energy tariffs have toppled the local cement makers from the race in recent months.
All publicly traded local cement producers witnessed a big slump in their net profits in the July-December period of the fiscal year 2022-23, with some companies incurring heavy losses.
Premier Cement, Meghna Cement, Crown Cement, Confidence Cement, and Aramit Cement are the locally grown listed cement makers in Bangladesh.
Of them, Premier Cement, and Aramit Cement registered titanic losses in the first six months of the current fiscal year.
Meanwhile, the remnant three companies saw a prodigious fall in their first half-yearly profits.
Cement manufacturers, industry insiders said, had to spend more capital on their manufacturing during the time due mainly to a monstrous hike in raw materials in the global market, pushing up their production costs many times.
Meanwhile, all other expenses had also gone up which curtailed the profits of the firms, they said.
Clinker which is the principal raw material for cement manufacturing is entirely import-reliant. The price of this material hiked in the global market manifold since the start of the Russia-Ukraine war coupled with soaring freight costs.
Due to these reasons, the production costs of cement makers went up manifold during the first half of the current fiscal, pushing them into the ditch, several officials of cement companies familiar with the matter said.
Meanwhile, Bangladesh had been suffering from high inflation in the past few months which shrunk people’s purchase capacity, putting an ominous impact on the sector’s growth, they added.
The revenue of Premier Cement Mills PLC stood at Tk 887.5 crore in July-December of FY23 which was more than 50 per cent up from Tk 589.79 crore in the same period last fiscal.
Despite this titanic jump in revenue, the cement maker posted a net loss of Tk 25.92 crore in H1 of the current fiscal year.
The company made a net profit of Tk 2.45 crore in the first half of FY22.
Kazi Md Shafiqur Rahman, company secretary of Premier Cement told The Business Post, “The steep devaluation of the taka against the US dollar, price hike of raw materials and fuel energy and coals led to a dreadful surge in production cost which hampered our profits.”
Meanwhile, Aramit Cement Ltd reported a net loss of Tk 26 in the July-December period of the current fiscal year.
With this figure, the listed company’s first half-yearly loss intensified by 87 per cent from the loss of Tk 13.9 crore in the July-December half of FY22, according to a filing posted on the Dhaka Stock Exchange (DSE) website Wednesday.
The company said the limitation in LC opening, the dollar crisis, and soaring import costs collectively wiped out its earnings in the first six months of FY23.
Syed Kamruzzaman, company secretary of Aramit Cement told The Business Post that they suffered a lot during the July-December half of FY23 due mainly to the dollar crisis and a staggering rise in import costs.
“We were unable to obtain a letter of credit (LC) due to the dollar crisis which led to a halt in raw materials imports, ultimately hampering the production,” he added.
The company during the period had to bear the basic operating costs without any revenue. Additionally, due to the surge in dollar prices, international payments became more costly, putting a further strain on its finances, according to Kamruzzaman.
Confidence Cement, another major local cement producer registered a nearly 23 per cent plunge in net profit in H1 of the fiscal 2022-23 on a year-on-year basis.
The cement maker registered a net profit of Tk 34.63 crore in the July-December period of FY23 which was Tk 44.89 crore in the July-December period of FY22.
The company’s revenue rose by 5.82 per cent to Tk 195.13 crore in H1 of FY23 from Tk 184.39 crore in the corresponding period of the last fiscal.
The net profit of Meghna Cement Mills Ltd declined to Tk 1.96 crore in the first six months of the fiscal year 2022-23 from Tk 2.77 crore in the same period last fiscal year.
The company’s earnings per share (EPS) also dropped to Tk 0.65 for July-December of FY23 from Tk 0.92 for the same period of FY22.
Moreover, Crown Cement PLC, a leading cement producer in Bangladesh, also saw a year-on-year profit slump in the first six months of the current fiscal year.
The company’s net profit dropped to Tk 9.43 crore in H1 of the current fiscal, 14.8 per cent down from the profit of Tk 11.7 crore in the same period of
last fiscal.
