Multinational cement maker LafargeHolcim Bangladesh Limited (LHBL) reported 36.5 per cent higher consolidated revenue to Tk 854 crore in the first quarter of 2023 on a year-on-year basis, driven by higher price realisations due to an increase in retail cement price.
The publicly traded company experienced remarkable growth in sales from aggregates in Q1 of the current year despite facing numerous challenges such as decreased demand, a capacity surplus, and downward pressure on retail prices to maintain market share, as per a report of EBL Securities Limited.
Out of the total sales revenue, 99.5 per cent came from the local market, and the rest came from exports and EPZs.
In the March quarter, the cement maker’s gross profit margin rose to 36 per cent, surpassing the five-year average of 31.5 per cent.
Additionally, the operating profit margin and net profit margin have shown significant growth, reaching 28.5 per cent and 22.3 per cent respectively, in Q1 of 2023, compared to the five-year averages of 22.4 per cent and 16.9 per cent respectively.
EBL Securities Limited in its equity report prepared on the LHBL said the company in the current year’s first quarter experienced a significant 29 per cent YoY increase in power and fuel bills, following a 5.7 per cent increase in 2022, thanks to the rise in energy and fuel prices and regular load shedding, impacting the company’s financial performance and cost structure.
Although LafargeHolcim recorded higher profitability in the January-March quarter riding on the increased retail prices, the company is expected to face mid-term challenges in 2023, including pressure from decreased sales due to adverse macro factors, the upcoming monsoon season, and sluggish demand during the election period, the report added.
As per the EBL report, the FY24 national budget introduced a 40 per cent increase in duty on the import of clinker, but LHBL’s unique advantage of sourcing clinkers from its mines in Meghalaya, India, and transporting them to its Chatak plant through a cross-border elevated conveyor belt, provides protection from the price volatility of raw materials, helping to maintain healthy profit margins.
The company’s aggregates production plant recommenced production in January 2022 after being restricted by the Ministry of Industries for around four months, EBL Securities said.
Subsequently, revenue contribution from this segment has increased to 12.6 per cent as compared to 1.3 per cent a year ago.
It is expected that revenue growth from this segment will continue in the future as well, considering it is an import substitute product and the strong demand in the local construction sector, the report said.
LHBL posted a 102 per cent year-on-year jump in net profit to Tk 191 crore in the first quarter of the current year.
The publicly traded company’s operating earnings before interest and taxes (EBIT) stood at Tk 243 crore in the January-March quarter this year, a growth of 90 per cent over the same period last year.
Meanwhile, the multinational’s net sales jumped by 37 per cent to Tk 854 crore in the first quarter of 2023, compared to Tk 625 crore in 2022.
Its earnings per share (EPS) increased to Tk 1.64 for the January-March quarter this year, from Tk 0.81 for the same quarter last year.
Iqbal Chowdhury, chief executive officer of LHBL, said, “The first quarter’s performance implies the strength of our diverse product portfolio and strategic presence, driven by innovative products, high-value solutions, a digital footprint, and new channels.”
“We are also supporting our customers with sustainable waste management solutions through Geocycle. I wholeheartedly thank all our employees, along with our valued channel partners and stakeholders, for this strong start to the year,” he added.
LafargeHolcim declared a 48 per cent final cash dividend to its shareholders for the year ending in December 2022, the highest since its incorporation.
Its earnings per share stood at Tk 3.83 for the year ended in December 2022, up from Tk 3.34 for the year ended in December 2021.
LHBL, previously known as Lafarge Surma Cement Limited, a joint venture of LafargeHolcim and Cementos Molins, is the only fully integrated cement manufacturer of Bangladesh along with three grinding plants. It is engaged in manufacturing and marketing cement, clinker, and clearsized aggregates.
