Crown Cement profits amid spike in business costs

Crown Cement posted stellar profits in fiscal 2022-23, despite industry-wide challenges stemming from rising energy and gas prices as well as the depreciation of the taka against the dollar.

According to its disclosure to the Dhaka Stock Exchange (DSE), the cement manufacturer reported a profit of Tk61 crore, compared to the Tk23 crore losses suffered in the previous fiscal year.

The company stated that, based on price-sensitive information, its profit has increased due to sales growth and an increase in sales prices compared to the previous year.

Industry insiders were shocked when the government increased gas prices for heavy industries. Additionally, the cost of raw material imports rose due to the taka's devaluation, which saw a decline of over 24% against the US dollar in the last fiscal year. Both of these factors contributed to an increase in business costs, according to an industry insider.

In the last fiscal year, the gas price for captive power plants increased from Tk16 to Tk30, marking an 88% jump. For large industries, the price surged from Tk11.98 to Tk30, representing a 150% increase.

Due to this, Crown Cement incurred losses in the first quarter of the last fiscal year. However, it managed to turn around and offset the cost hike by increasing its product prices.

Seeking anonymity, a senior official at the company told The Business Standard, "In the first quarter, Crown Cement could not escape the economic adversities. High taxes, taka devaluation, and gas and power crises hit the company hard."

Because of the higher cost of raw materials, the company had to increase the price of its products. Also, it has done a good job managing its operating costs, he said.

Meanwhile, the Crown Cement board has recommended a 20% cash dividend for its shareholders for the last fiscal year, compared to 10% in FY22.

Despite posting a good profit, its share price was stuck at Tk74.40 each due to the floor price at the DSE since 12 June.