LafargeHolcim shines defying industry slowdown

LafargeHolcim Bangladesh Limited posted stellar year-on-year growth in its sales and profit in the July to September quarter despite the sluggish trends of the cement industry.

In the third quarter of 2022, the company's revenue increased by 24% to Tk572 crore, and profit rose by 21% to Tk114 crore, compared to the same period in 2021.

The Bangladesh Cement Manufacturers Association Vice President Md Shahidullah, who is also the managing director of Metrocem Cement, said the industry is selling less amount of cement nowadays due to high inflation and macroeconomic stresses that slowed down construction in projects and retail homebuilding.

Also, the import of raw materials dropped drastically in recent months, he added. 

Explaining the factors behind LafargeHolcim's profit growth, its Chief Executive Officer (CEO) Rajesh Surana said, "Our new products and business channels gained traction. The innovation in digital aspects and development of new business segments also contributed strongly to our topline growth."

Following its pre-pandemic merger between Lafarge and Holcim in Bangladesh, the company launched two new Holcim branded products –"Holcim Water Protect" and "Holcim Shokti" – during the pandemic and the two together are making 5% of Holcim volume now, the CEO said.

LafargeHolcim also achieved the milestone of close to 10% volume from its new channel "Direct to Retail" where it directly delivers cement to retail customers, instead of selling through dealers.

Its online sales through some top-tier e-commerce, its own Facebook page, and a dedicated sales portal also helped the revenue growth.

The company has a unique edge of depending on its own sources of its core raw material limestone from the mines in Meghalaya, India that comes to its Chhatak, Sylhet factory through a conveyor belt.

This edge offers the company to avert freight charges and international raw material market volatility, while the profitability of its competitors mostly depends on these factors.

Hence, to best utilise its edge, LafargeHolcim is selling more and more of its less processed primary raw material in the form of aggregates that are being used in concrete mixes and giving the company a handsome profit margin.

In the first six months of 2022, profitable aggregates business contributed to 6% of the company revenue, which soared to 12% in the July-September period.