Premier Cement returns to profit in Q2, riding on higher revenue

Premier Cement Mills PLC, one of the leading cement makers in Bangladesh, returned to profit in the second quarter of the fiscal year 2022-23 (FY23) after suffering a big loss in the first quarter, riding on significant growth in revenue.

The cement maker made a profit of Tk 7.38 million in the Q2 for October-December while it suffered a loss of Tk 267 million in the Q1 of FY23.

However, the company still had losses of Tk 259 million in six months through December 2022 as against profit of Tk 245 million in the same period a year ago.

The top-tier cement producer also incurred an annual loss of Tk 1.12 billion in the FY22 as against profit of Tk 652 million a year earlier, mainly for higher costs of raw materials and shipping charges.

The depreciation of taka added to the expenses for the company importing a big chunk of raw materials used in the production.

The company published its unaudited Q1, Q2 financial statements of the FY23 and audited annual financial data of the FY22 at a time on Tuesday.

When asked, Company Secretary Kazi Md Shafiqur Rahman, Premier Cement returned to profit in Q2 riding on a significant growth in sales revenue.

"The new unit of the company started commercial production last year, increasing the production capacity as well as sales that helped it return in profit," said Mr Rahman.

The cement maker's sales revenue jumped 72 per cent year-on-year to Tk 5.14 billion in Q2 through December 2022.

Premier Cement started commercial production from its new factory unit from July 1 last year, enhancing its daily production capacity from 8,000 tonnes to 25,520 tonnes.

The new plant was set up by using a vertical roller mill (VRM), which is an updated technology for the cement industry. VRM technology allows high-quality cement production at a low cost and in a small space.

The new factory unit helps Premier Cement produce cement at a low cost, increasing its capability of doing business amid intensive competition.

The company secretary said although raw material prices eased a bit in the recent months, they are still facing some challenges, such as opening letter of credit for the needed imports due to dollar shortage.

Despite the company suffering losses for FY22, the board declared a 10 per cent cash dividend for the year from its reserve and surplus. In 2021, it paid a 20 per cent cash dividend.

Listed in 2013, the cement producer's stock price has been languishing at the floor price of Tk 44.50 since October 20 last year.

In February last year, Bangladesh Securities and Exchange Commission (BSEC) allowed the company to raise Tk 3.10 billion by issuing preference shares for paying off high-cost debts that would reduce financial costs and boost profits.

The company secretary said they have already raised more than Tk 1.0 billion by issuing preference shares while raising the remaining amount is under process.

Preference share, also known as preferred stock, is an exclusive share option, which enables shareholders to receive dividends announced by the company before the equity shareholders.

[email protected]