Profit jumps leaving behind the losses over the previous two years
Heidelberg Cement Bangladesh Ltd has posted nearly double sales for the first half of the year, helping the company secure a handsome profit for the first time in two and a half years.
The listed cement multinational, which had been losing money since 2018 mainly due to a stressed topline, squeezing gross profit margin and high tax expenses, appears to have bounced back this year as its revenue crossed Tk960 crore for the January-June period, which was below Tk560 crore over the same six months of 2020.
The sales jump helped the company post earnings per share (EPS) at Tk11.79 for the first half of the year, while it incurred a loss of 2.54 per share over the same period a year ago.
The Business Standard contacted Heidelberg Cement Bangladesh's Company Secretary Md Emdadul Haque to learn about its business dynamics nowadays.
He did not comment or provide any information beyond the financial statements, despite the fact that the company did not provide any explanation of the significant deviation in the financial figures.
However, the several lockdowns to curb the Covid-19 spread since March last year clearly impacted the company's sales and profits.
According to quarterly statements, Heidelberg Cement Bangladesh suffered an over 70% drop in quarter-on-quarter sales in the April-June quarter of 2020, which mostly was lost in the nationwide shutdown. Amid the first wave of Covid-19, the company absorbed Tk18.7 in losses against each share having a face value of Tk10.
The company came back in profits at the second half of the year, but that was not enough to break the two-year trend of annual losses at the end of 2020.
However, as the cement industry began to enjoy their consensus on a price hike on the ground of increases in raw material prices and freight charges after a long-lasting topline war Heidelberg too turned around at the beginning of this year, like most of its competitors.
Over the first quarter this year, its sales grew to Tk550 crore from Tk382 crore over the January-March period of 2020, which helped the company post 10-fold quarterly profits.
The momentum again was hurt as soon as the country went under government restrictions at the beginning of the second quarter despite the fact that the factories were allowed to run while cement dealerships were shuttered over some weeks.
Quarterly sales dropped to Tk409 crore in the April-June period amid some disruption in sporadic lockdowns, which allowed companies to directly supply to project sites but no dealer sales.
Also, the after-tax profit for the April-July period more than halved against that in the previous quarter.
However, as the lockdown was a more relaxed one in the second quarter of this year, compared to the same period of 2020, Heidelberg's sales and profits witnessed a year-on-year jump and the same in the two consecutive quarters helped the company secure a half-yearly jump.
The ongoing stricter lockdown, which coincidentally began with the opening of the new quarter, is hurting all the construction material companies significantly as their factories are closed for two consecutive weeks and retail outlets are closed for an even longer period.
Analysts, however, still are happy with the construction projects, which are consuming construction material regardless of the extent of lockdown, while the post-lockdown demand since last year has already proved the resilience of the market and the industry.
Midway News Team
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