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Raw materials price hike takes a toll on net profit of Premier Cement

Mohammad Mufazzal | May 12, 2019 00:00:00

The net profit of Premier Cement Mills declined moderately for the fiscal year (FY) 2018 compared to previous year due to various reasons including the increased cost of raw materials.

The company reported its revenue of above Tk 10.04 billion for 2018. During the period, the company's revenue rose 8.29 per cent from Tk 9.28 billion reported for the FY 2017.

On the other hand, the company's net profit declined to Tk 442.18 million for 2018 from Tk 537.14 million reported for 2017.

In accordance with the economic growth of the country, the company has also witnessed a stable performance,

said Mohammad Mustafa Haider, chairman of the Premier Cement.

"But due to an increase in the cost of raw materials in the international market coupled with unfavourable foreign exchange loss, our cost of sale and operation increased remarkably, and the company's net profit declined," Mr. Haider said in his message in the company's annual report of the FY 2018.

According to the annual report, the company's selling and distribution expense rose to Tk 418.72 million for 2018 from Tk 385.74 million reported in 2017.

The financial expense also rose to Tk 398.17 million for 2018 from Tk 278.06 million calculated in previous FY 2017.

The company also saw a mixed trend in net profit in previous four FYs.

The company's net profit was above Tk 691.14 million in 2016, above Tk 408.91 million in 2015 and above Tk 509.10 million in 2014.

The company has reported consolidated EPS of Tk. 4.18, consolidated NAV per share of Tk. 43.13 and consolidated NOCFPS of Tk. 6.88 for the year ended on June 30, 2018 as against Tk. 5.08 (restated), Tk. 40.95 (restated) and Tk 4.21 (restated) for same period of the previous year.

Meanwhile, the Premier Cement Mills has disbursed 10 per cent cash dividend for the year ended on June 30, 2018.

The company disbursed 20 per cent cash dividend in 2017, 15 per cent cash dividend in 2016, 20 per cent cash dividend in 2015 and 30 per cent cash dividend in 2014.

The company's consolidated EPS stood at Tk. 1.35 for January-March 2019 as against Tk. 2.08 for January-March 2018.

Kazi Md. Shafiqur Rahman, the company secretary of Premier Cement Mills, also blamed the increased cost of raw materials and unhealthy market competition of selling products behind decline in net profit.

"Sometimes, a cement manufacturer has to sell products at a lower rate due to tough market competition. This competition is one of the reasons behind the decline in net profit amid increased amount of revenue," Mr. Rahman told the FE.

He said recently the price of clinkers declined a little bit and it may leave a positive impact on the company's net profit for April-June, 2019.

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.

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