Heidelberg Cement holds onto growth trajectory despite revenue plunge

Higher selling prices and lower input costs helped Heidelberg Cement secure a moderate year-on-year growth in profit in the January-March quarter this year despite a sharp decline in sales revenue.

The Germany-based cement maker's earnings grew 1.6 per cent to Tk 393 million in the quarter through March this year, compared to the same period a year earlier.

EPS rose to Tk 6.96 for the first quarter this year, up from Tk 6.85 a year ago, according to its un-audited financial statements published on Wednesday.

A higher income was achieved even when sales plunged 15 per cent year-on-year in Q1 to Tk 4.81 billion.

"Profit increased mainly for higher net sales and lower costs of production," said the company in its earnings note.

The cost of sales, which included all associated costs to produce cement, was Tk 4 billion in January-March this year, equivalent to 83 per cent of total sales, reduced from 85 per cent of the sales in the same quarter of the year before.

The cement maker managed to offset some of the costs by increasing sale prices by around 10 per cent year-on-year, while lower prices of raw materials in the global market supported the profit growth to some extent, said an official, requesting not to be named.

Meanwhile, the company's interest income from bank deposits jumped 188 per cent year-on-year to Tk 75 million in Q1, owing to interest rate hikes, showed the company's financial statements.

The net operating cash flow per share, which reflects a company's ability to generate cash from its operations, dropped to Tk 23 per share in Q1 from Tk 27.49 in the same quarter of the previous year, mainly for lower sales volume and collection.

Meanwhile, the stock price fell 1.12 per cent to Tk 229.3 per share on the Dhaka Stock Exchange on Wednesday.

Annual performance

Heidelberg Cement came back strongly in 2023, overcoming challenges rendered by high inflation and soaring energy costs coupled with a sharp devaluation of the taka against the dollar.

The cement maker secured a profit of Tk 460 million in 2023 after suffering a net loss of Tk 233 million in 2022. Its annual sales grew more than 7 per cent year-on-year to Tk 17.96 billion in 2023.

Encouraged by the remarkable turnaround, the board recommended a 25 per cent cash dividend for 2023, up from 10 per cent for 2022.

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