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LafargeHolcim posted a 36 per cent year-on-year profit growth to Tk 1.20 billion in July-September - a remarkable feat at a time when the construction industry is reeling from sharp cuts in both public and private investment.
The success was achieved due to higher sales of premium products and aggregates, the company said as its board of directors approved the quarterly financial statements on Tuesday.
Overall sales grew 6 per cent year-on-year to Tk 6.68 billion in the quarter through September.
"The premium product portfolio and the aggregates business continued growth momentum," said Md Iqbal Chowdhury, chief executive officer of the company, in a statement.
While the broader construction industry has been facing headwinds amid subdued public sector investment and lower private credit growth, LafargeHolcim delivered a resilient performance, he said.
"We achieved solid volume growth in cement and aggregates, driven by strong market demand and growing customer confidence in products and services," added Mr Chowdhury.
LafargeHolcim is engaged in the production of cement, clinker, aggregates, and waste management services (Geocycle). It produces clinker and cement under the brand names Supercrete and Holcim at its Chhatak, Sunamganj plant, which is the only fully integrated dry-process cement plant in Bangladesh.
The company's aggregates business has grown at a 46 per cent compound annual growth rate (CAGR) over the last three years and accounts for around 20 per cent of total revenue.
At the same time, specialized cement products such as 'Water Protect' and 'Fair Face' have witnessed increased demand, indicating superior consumer preference, said the CEO.
Although rising energy costs and market price fluctuations put pressure on profitability, the company took cost-efficiency measures and adopted strategic pricing reviews to overcome the challenges, he said.
"Our innovation and diversification efforts continued to yield results," said Mr Chowdhury, referring to the co-processing of more than 34,000 tonnes of waste, which successfully reduced the necessity of fossil fuels by 11 per cent.
"By diversifying our portfolio and deepening our engagement with private sector clients, we've not only weathered the slowdown but continued to grow."
The company has planned to intensify operating efficiency, invest in an alternative and affordable energy mix, diversify its product portfolio, and refine its pricing strategy to ensure growth in the coming quarters.
"We are driving forward critical investments in sustainability and digital transformation. These initiatives are designed not only to deliver immediate results but also to cement our long-term competitive advantage and ensure sustained market leadership," the CEO said.
Interim cash dividend
Based on the profit growth, the board of directors declared an 18 per cent interim cash dividend, meaning investors will get Tk 1.8 per share against earnings of Tk 1.03 per share in the quarter.
The company will spend Tk 2.09 billion to pay interim cash dividends to shareholders, whereas it earned a profit of Tk 1.20 billion in the quarter to September. That means the company will provide Tk 890 million from its retained earnings.
LafargeHolcim is a frontline building materials solutions provider, operating for more than two decades in Bangladesh. It has invested $500 million - the largest foreign direct investment in the sector. It is a joint venture of Holcim Group based in Switzerland and Cementos Molins based in Spain.
Industry insiders say LafargeHolcim Bangladesh has a unique edge in business as it depends on its own source of core raw material - limestone - which is transported from mines in Meghalaya to its factory in Chhatak, Sylhet by a conveyor belt.
This advantage creates an opportunity for the company to avoid freight charges and escape international raw material market volatility.
Meanwhile, the stock of LafargeHolcim dropped 0.19 per cent to Tk 51.20 per share on Tuesday on the Dhaka Stock Exchange.
LafargeHolcim and Jalalabad Gas Transmission and Distribution System signed an agreement in June this year, which will ensure stable gas supply to its Chhatak plant in Sunamganj. The deal will be effective from January next year.
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