HeidelbergCement Bangladesh incurs losses in Oct-Dec

After displaying exceptionally bright business performance in the first three months of 2023, HeidelbergCement Bangladesh experienced a decline in profit during the following two quarters.

However, the multinational company failed to sustain its growth trajectory and plunged into losses again in the October-December quarter.

The cement manufacturer faced challenges due to a shortage in foreign currency, leading to the inability to open letters of credit and consequently hindering its ability to utilise its full production capacity, as reported by company sources.

Additionally, it experienced a decline in sales volume and faced increased costs of raw materials, further contributing to the loss incurred during the quarter.

The Germany-based cement manufacturer began 2023 on a positive note by breaking a five-quarter losing streak and returning to profit after posting a remarkable performance in the first quarter.

In the January-March quarter, the company's revenue was Tk567 crore and its profit was Tk38.69 crore, but its revenue fell 20% and its profit fell 70% in the following quarter.

The decline continued in the three months to September as well, as revenue shrank by 36% and profit by 93% compared to the January-March quarter, and stood at Tk365 crore and Tk2.70 crore, respectively.

In the final quarter of 2023, the company reported a loss of Tk4.58 crore, according to a statement submitted to the Dhaka Stock Exchange.

Even its peer competitor, LafargeHolcim Bangladesh, which achieved record revenue and profit in 2023, could not secure growth in profit during the December quarter.

But the local cement manufacturers – Crown Cement and Premier Cement – performed remarkably well in the October–December quarter of 2023.

Molla Mohammad Majnu, managing director of Crown Cement, told The Business Standard earlier, "Despite a slowdown in the cement industry, we performed well. The primary reasons for our success lie in establishing a strong brand identity and prioritising exceptional customer service. These factors have set us apart from our competitors."

"Despite the economic slowdown and a reduction in government projects, we remain unaffected, as we are not extensively involved in such initiatives. Our product prices are higher than government quotations, and we are not actively pursuing government projects," he added.

During the first trading day following the declaration of dividends, HeidelbergCement Bangladesh stock exhibited a gloomy performance at the Dhaka bourse, plunging over 6% to close at Tk245.30 amid a business slowdown.

The company recommended a 25% cash dividend for 2023, marking a significant increase from the 10% cash dividend declared in the previous year.