Heidelberg Cement posts Tk 91m profit in Q2

Heidelberg Cement Bangladesh appears to have put its agonising days behind, as the multinational cement maker posted profits for the second consecutive quarter, thanks to higher net sales.
The German-based cement manufacturer recorded profits of Tk 91 million in the April-June quarter this year, compared to a loss of Tk 37 million in the same quarter the previous year.
As a result, the company's earnings per share returned to positive territory at Tk 1.61 for the April-June quarter, compared to a negative figure of Tk 0.66 per share in the same quarter last year.
According to its unaudited financial statements published on Wednesday, sales revenue for the multinational cement maker, which produces Scan-branded cement, grew by 17 per cent year-on-year to Tk 4.53 billion in the June quarter.
During the first half of this year (January-June), the company achieved a net profit of Tk 478 million, compared to a loss of Tk 205 million in the same period of the previous year.
Company Secretary of Heidelberg Cement Md Emdadul Haque could not be reached for comments regarding this performance.
However, an official of the company said that Heidelberg Cement's recovery was backed by higher sales prices and lower production costs. The cement raw material price eased to some extent in the global market since October last year.
The cement-maker's sales revenue increased by 10 per cent, while costs of sales rose by less than 2 percent in the January-June period, which contributed to a higher gross profit for the company.
Besides, Heidelberg managed to lower administrative costs by 4 per cent year-on-year to Tk 325 million in the first half of this year.
Also, the company transferred some of the costs onto the consumers by raising cement prices by 15 per cent to 20 per cent during the period, which helped it achieve profits for consecutive quarters.
The net operating cash flow per share stood at Tk 40.68 for January-June 2023, compared to a negative Tk 5.34 for January-June 2022.
The net operating cash flow also increased in January-June, driven by higher sales collection, shifting of supplier payments to UPAS (Usance Payable at Sight) loans and higher bank interest income, as stated by the company in its earnings note.
Heidelberg Cement returned to profit in the January-March quarter this year after suffering losses for five consecutive quarters, owing to costlier raw materials and the depreciation of the local currency against the US dollar.
Since the beginning of 2022, the overall cement industry in the country has suffered, facing soaring raw materials prices, a decline in development works and stiff competition among peers amid the acute dollar crisis.
Despite the higher earnings growth, Heidelberg Cement's stock price dropped 3.18 per cent to Tk 289.10 on Wednesday.
The company's stock price has already risen significantly since April this year, which might be the reason for the price erosion, according to a stockbroker.
After remaining stuck at the floor for eight months, the company's stock price started to rise from April this year as it returned to profit in the January-March quarter this year. The cement maker's stock price soared 88 per cent to Tk 337 within three weeks in early May this year.
The company got listed on the Dhaka Stock Exchange in 1989 as Chittagong Cement Clinkers Grinder, which was later acquired by Heidelberg Cement.
Heidelberg Cement suffered a loss of Tk 233 million for the year 2022. Despite the loss, it declared a 10 per cent cash dividend from retained earnings.
According to the Bangladesh Cement Manufacturers Association (BCMA), there are 42 cement manufacturers in Bangladesh, seven of which are listed on stock exchanges, while more than Tk 400 billion has been invested in the industry.
Currently, the cement industry's combined production capacity is more than 58 million tonnes while the local demand is about 33 million tonnes, according to sector analysis by EBL Securities.
Ten cement makers, including two multinationals, hold approximately 75 per cent of the entire market share among the existing market players.
Despite the challenges, major players in the cement industry are continuing their expansion spree, even as the industry has become increasingly oversaturated.

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