LafargeHolcim posts strong profit growth as HeidelbergCement books losses

July 20, 2022, 11:05 p.m.

Last modification: July 20, 2022, 11:17 p.m.

Infographic: TBS

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Infographic: TBS

HeidelbergCement and other cement makers are struggling to stay afloat amid soaring cost increases, but the threat of inflation couldn’t stop LafargeHolcim Bangladesh Limited from doing well.

The two listed multinationals released their unaudited financial reports for the April-June 2022 quarter on Wednesday, while their peers have yet to make the disclosures.

LafargeHolcim posted 10% profit growth in the three months to June, while HeidelbergCement posted losses for the fourth consecutive quarter.

In the report, HeidelbergCement said it suffered losses mainly due to rising raw material costs, rising transportation costs and devaluation of the taka against the US dollar. And rising costs also created negative net operating cash flow for the company.

Industry leaders said cement companies are under pressure to raise prices for finished products to maintain profitability, but fierce competition in the local market barely allows price increases.

However, LafargeHolcim has its own clinker and aggregate chip production plant. For this, the company does not have to import raw materials. Global market volatility therefore does not affect the cement manufacturer like its peers.

An official from the Bangladesh Cement Manufacturers Association (BCMA) said LafargeHolcim is the only self-sufficient cement producer in the country and has put the company in an advantageous position in the competitive market.

According to its financial statements, LafargeHolcim’s revenue rose more than 6% to Tk 501 crore, while net profit jumped 10% to Tk 122.9 crore in the April-June quarter of this year. year.

The company’s CEO, Rajesh K Surana, said in a press release on Wednesday, “We are navigating through difficult times due to the rising cost of freight and raw materials globally. I am extremely proud of how my team came up with innovative ideas to tackle the challenges. With a focus on agility, cost and innovation, we demonstrated strong performance in the second quarter of 2022, setting a solid foundation for the rest of the year. »

“I am very encouraged by our performance in the second quarter. Our innovative products, our efficient distribution channels, our new e-commerce platform and our aggregates businesses have ensured strong growth momentum,” he added.

During the same period, HeidelbergCement’s revenue fell 5% year-on-year to Tk 388.78 crore and was 28% lower than the previous quarter.

At the end of the first half of this year, the company’s earnings per share stood at Tk 1.87, while earnings per share was negative at Tk 3.63.

According to the BCMA, prices for cement clinker and other raw materials, as well as shipping costs, have increased over the past three months due to rising prices in the international market.

Last year, a 50 kg bag of cement was sold at 420 Tk in the domestic market. Now it sells for Tk450. Manufacturing companies suffer a loss of around Tk 40 per bag of cement, he added.

HeidelbergCement’s share price is also following its quarterly downward trend, where the price is at its lowest over the past year.

On Wednesday, HeidelbergCement shares closed down 1.90% at Tk192 each on the Dhaka Stock Exchange.

LafargeHolcim stock price closed at Tk65.50 each on the day.