Ceramic industry yet to fully bounce back

The ceramic industry, a major backward linkage of the construction sector, is yet to fully bounce back from the shocks of the Covid-19 pandemic.

Although there has been some improvement after the coronavirus shutdown, the ceramic industry has not been able to turn around as the construction sector has not fully recovered.

Industry insiders say the demand for ceramic products at home and abroad has declined during the Covid-19 pandemic. In addition, the exports of the products have also dropped.

The ceramic sector suffered around a 30% decline in sales in the last fiscal year due to the coronavirus breakout in the country. Although the situation has improved a bit after the lockdown, the ceramic sector is still at a 10-15% decline in revenue.

Zahedi Hassan Chowdhury, secretary of the Bangladesh Ceramic Manufacturers and Exporters Association (BCMEA), told The Business Standard, "The demand for ceramic products is low in both domestic and international markets. Although the demand for tiles is high in the country, the demand for tableware and sanitary ware is low."

He said that about 80% of the production in the sector is exported abroad.

According to the Export Promotion Bureau (EPB), the exports of ceramic products were Tk2.69 billion in fiscal 2019-2020, and the export target has been set at Tk3.5 billion for the current fiscal year.

Exports in the first half of the current fiscal year were Tk1.5 billion, which fell short of the target by 10% and 16% less than the previous year.

Zahedi Hassan Chowdhury said, "Tiles are used most in the development work of the government. But development work has not yet begun in full swing. The ceramic industry will have to wait a few more days to gain momentum. Maybe it will get some momentum after the winter season.

"The exports of ceramic products are also declining. Countries to which goods are exported have reduced their purchases. For which, this sector could not completely recover from the drop in sales. It is still at 10% lower than the usual level." 

Status of listed companies

Of the five listed companies in the ceramic sector, four have posted profits but at lower rates than the previous year and one reported losses.

Multinational RAK Ceramics (Bangladesh) company's revenue declined by 9.82% in 2020 compared to the previous year and net profit decreased by 58.81%.

However, at the end of 2020, the company's revenue was Tk582.89 crore, in which the profit was Tk31.06 crore and earnings per share stood at Tk0.73.

RAK Ceramics has declared a 10% cash dividend for shareholders as its profits fell. The company paid a 15% cash dividend in the previous fiscal year.

In the first half of the current fiscal year, the revenue of the Fuwang Ceramic Industry has increased by 26%. However, the company reported about a 1% slide in profit.

Monno Ceramic Industries Limited's EPS for the first half of the current fiscal fell by 47% compared to the previous year.

In the July-September quarter, EPS fell by 66%, and in the October-December quarter, it fell by 14%.

In the first six months of this fiscal year, the revenue of Shinepukur Ceramics fell by about 4% but the profit increased by 77%.

In the July-December period, the company had total revenue of Tk66.56 crore and a profit of Tk1.48 lakh. The EPS was Tk0.10, which is 66% higher than the same period of the previous fiscal year.

Compared to the previous year, the total revenue of Standard Ceramic Industries has increased by 17% but the profit has decreased by 71% and EPS fell by 67%.

The company's half-yearly total revenue was Tk15.30 crore. The loss was Tk81.55 lakh.

About the ceramic industry

In recent years, the ceramic industry in Bangladesh has grown to a large extent. In Bangladesh, 66 brands manufacture ceramic products.

The domestic market for ceramic products, including tableware, tiles and sanitary ware, is worth around Tk6,000 crore annually.

Apart from 66 brands, more than 100 ceramic manufacturing companies, both small and medium, have evolved in the country.

At present, the sector employs around 5,00,000 people, including 55,000 direct employees and those from the backward linkage industry.

Annually, the companies manufacture 25 crore pieces of tableware, 15 crore square feet of tiles and 50 lakh pieces of sanitary ware.

According to a United States Agency for International Development (USAID) study, Bangladesh's ceramic industry has experienced a 200% growth in production in the last five years. The industry is also remarked to expand rapidly in the global market with its high-quality products.

At the end of 2018, the market size of the ceramic industry was Tk5,950 crore, to which the tiles industry contributed the most - Tk4,500 crore.

The size of tableware and sanitary ware industries were Tk500 crore and Tk920 crore respectively, adds USAID.

Bangladesh's ceramic industry earns more than Tk356 crore through export. Of the different ceramic products, tableware is exported to more than 50 countries including the US, Canada, European Union, Australia; tiles are exported to India, Nepal, and Bhutan; and sanitary ware is exported to the Middle East, especially to the UAE. Tableware accounts for more than 90% of Bangladesh's ceramics exports.