Non-adjustable minimum tax and increased competition in the market did not have any effect on LafargeHolcim, as its net profit increased by 56 percent in the 2019 financial year.
"2019 was a challenging year for the cement industry. The impact of increased raw material costs and additional taxes was significant," said Rajesh Surana, CEO of LafargeHolcim Bangladesh.
He added that despite this impact, LafargeHolcim demonstrated a strong performance trend.
"Our focus on improving operational efficiencies, driving commercial innovation and cost optimisation continues to be effective."
LafargeHolcim posted a significant improvement in financial results during 2019. Its consolidated sales revenues for the year rose by 7 percent to Tk1,784 crore.
In the financial year 2019, LafargeHolcim's net profit was Tk173.73 crore and its earnings per share (EPS) stood at Tk1.50, while in 2018, its net profit was Tk111.46 crore and its EPS had been Tk0.96.
Its net asset value (NAV) per share was Tk13.95 last year.
During a board meeting on Wednesday, LafargeHolcim decided to give out 10 percent cash dividends to its shareholders for the financial year 2019.
The cement company will hold its annual general meeting on May 7 and the record date has been set at April 1.
LafargeHolcim earned the highest amount of net profit, Tk281.97 crore, in the financial year 2014. In the financial years 2010 and 2011, the company had faced losses. Since financial year 2014, it has been disbursing 10 percent cash dividends to shareholders.
Currently, LafargeHolcim has a capacity to produce 4.2 million tonnes of cement, which makes up 10 percent of the market in Bangladesh.
But the cement industry as a whole has started feeling the heat from the added 5 percent minimum tax imposed on the import value of raw materials since July 1 last year.
Following a plea by cement manufacturers to remove the minimum tax, the non-refundable advance income tax (AIT) was reduced to 3 percent, effective from January 1 this year.
MI Cement Factory Ltd, popularly known as Crown Cement, has posted an unprecedented loss of Tk1.89 per share for the July-December period of 2019, owing to the tax adversity.
"Crown Cement's financial result is reflecting the pressure on the entire cement industry," said Md Shahidullah, vice president of the Bangladesh Cement Manufacturers Association.
LafargeHolcim's share price at the Dhaka Stock Exchange decreased by 1.85 percent on Thursday, and its closing price stood at Tk42.30.
In January this year, its share price increased by 51 percent.
LafargeHolcim, which was listed on capital market in 2003, has a paid-up capital of Tk1,161 crore. Sponsors and directors of the company hold 64.68 percent of its share, while institutional investors have 15.83 percent, foreign investors have 1 percent and general investors have 18.49 percent of the shares.
LafargeHolcim Bangladesh Ltd is a frontline cement producer in Bangladesh. It is a joint venture of LafargeHolcim and Cementos Molins.