LafargeHolcim posts strong profit growth as HeidelbergCement counts losses

Infographic: TBS

HeidelbergCement and other cement manufacturers are struggling to stay afloat amid galloping cost hikes, but the inflation menace could not hold back LafargeHolcim Bangladesh Limited from faring well.

The two listed multinational companies on Wednesday published their unaudited financial reports for the April-June quarter of 2022, while their peers are yet to make the disclosures.

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

In the report, HeidelbergCement said it had incurred losses mainly due to the higher cost of raw materials, higher freight costs and the taka's devaluation against the US dollar. And the cost hike also created a net operating cash flow negative for the company.

The sector leaders said that cement companies are facing pressure to raise the prices of finished goods to keep their profitability, but the extreme competition in the local market barely allows prices to be increased.

However, LafargeHolcim has its own factory for the production of cement raw material clinker and aggregate chips. For this, the company does not have to import raw materials. So global market volatility does not affect the cement manufacturer like its peers.

A leader of the Bangladesh Cement Manufacturers Association (BCMA) said that LafargeHolcim is the only cement manufacturer in the country that is self-sufficient and it has put the company in an advantageous position in the competitive market.

According to its financial statement, LafargeHolcim's revenue grew over 6% to Tk501 crore, while net profit surged 10% to Tk122.9 crore in the April-June quarter this year.

Company's Chief Executive Officer Rajesh K Surana said in a press release on Wednesday, "We navigate through challenging times due to increased cost of freight and raw materials globally. I am extremely proud of how my team came up with innovative ideas to address the challenges. With a continuous emphasis 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, efficient distribution channels, new e-commerce platform and aggregates business ensured strong growth momentum," he added.

In the same period, HeidelbergCement's revenue fell 5% year-on-year to Tk388.78 crore and it 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 Tk1.87, while the earnings per share were Tk3.63 negative.

According to the BCMA, the prices of cement clinker and other raw materials, as well as shipping costs, have gone up over the last three months due to rising prices in the international market.

Last year, a 50kg bag of cement was sold at Tk420 in the domestic market. Now it is selling for Tk450. The manufacturing companies are incurring a loss of around Tk40 per bag of cement, it added.

The share price of HeidelbergCement also follows its quarterly downward trend, where the price is at the bottom level during the last one year.

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

LafargeHolcim's share price closed at Tk65.50 each on that day.