Premier Cement Mills has displayed a mixed trend in net income in last five years despite a steady growth observed in the company's turnover values during the period.
Officials at the company said their net profits sometimes failed to keep pace with the upward trend of turnover due to reasons, including unhealthy market competition.
The company reported turnover of more than Tk 10.22 billion for the year ended on June 30, 2017 against above Tk 9.36 billion for the year ended on June 30, 2016.
Despite increased turnover value, the company's net profit declined to Tk 562.01 million in 2017 from Tk 691.15 million in 2016.
Kazi Md. Shafiqur Rahman, the company secretary of Premier Cement Mills, said their company's net profit did not increase as per the turnover growth due to increased cost of raw materials and unhealthy market competition.
"Sometimes, a cement manufacturer has to sell products at a lower rate due to market competition. Such competition leaves impact on the company's net profit," Mr. Shafiqur said.
The company's cost of production and sales increased in 2017 compared to 2016.
In 2017, the company's cost of production rose to above Tk 8.59 billion, 17.23 per cent higher than the cost of production in 2016.
The company's cost of sales also rose in 2017 compared to 2016. In 2017, the cost of sales was above Tk 8.63 billion which was 17.09 per cent higher than the sales cost of 2016.
The company's turnover was above Tk 8.09 billion in 2015, above Tk 7.53 billion in 2014 and above Tk 6.41 billion in 2013.
On the other hand, the net profit was Tk 408.92 million in 2015, Tk 509.10 million in 2014 and Tk 499.17 million in 2013.
Due to mixed trend in net profit, an upward trend was not observed in the company's earnings per share (EPS) as compared to the upward trend was observed in turnover values during 2013-2017.
The company's EPS was Tk 5.17 in 2017, Tk 6.48 in 2016, Tk 3.83 in 2015, Tk 4.78 in 2014 and Tk 5.0 in 2013.
The market insiders also said that the price of cement has not increased as compared to increased manufacturing cost.
According to them, the price of one tonne of clinkers rose to $53 from $40 while the transport cost rose 66 per cent. They said the depreciation of local currency against US dollar is also played a role in squeezing the earnings.
During 2013 to 17, Premier Cement Mills recommended only cash dividend and the amount gradually declined from 2013 to 2016.
A mixed trend was also observed in the percentage of the company's return on asset (ROA), an indicator of how profitable a company is relative to its total assets, reported in last five years. The company's ROA displayed a down trend during 2013 to 2015. Later, the ROA rose in 2016 and again declined in 2017.
"In spite of many obstacles in this year, we have achieved a positive outcome in terms of sales volume from standalone point of view and our strong financials indicate more well-off position in our current business operation," Premier Cement Mills said in its financial statement for the year ended on June 30, 2017.
Premier Cement, presently an 'A' category company, was listed with the stock exchanges in 2013.
The company's sponsor-directors hold 55.13 per cent shares, while institutions hold 17.07 per cent, foreigners 0.01 per cent and public shareholders 27.79 per cent shares as of March 31, 2018.
On Thursday, the company's share trading was closed at Tk 80.30 each with a marginal rise of 3.07 per cent or Tk 2.4 per share.
Above 30 cement manufactures are in operation in the country, but the number of companies listed with stock exchanges is only seven.
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