Steel, cement producers log higher profits as sales rocket

Most of the listed rod and cement producers in Bangladesh posted higher profits in the July to September period riding on higher sales as economic activities picked up thanks to the improving coronavirus situation.

Among the five steel makers listed on the Dhaka Stock Exchange (DSE), three have made financial disclosures for the quarter, with all reporting massive jump in profits.

Earnings of BSRM Steel and BSRM Ltd more than tripled in July to September, year-on-year.

Tapan Sengupta, deputy managing director of BSRM Ltd, attributed lower production cost thanks to the efficiency gains, increased sales volume, and an efficient distribution channel for the higher profit margin.

Earnings per share (EPS) of BSRM Ltd, the largest steelmaker in Bangladesh, rocketed 202 per cent to Tk 4.29, while that of BSRM Steel surged 204 per cent to Tk 2.89, DSE data showed.

GPH Ispat's EPS soared 63 per cent to Tk 1.13.

"We had a stock of raw materials. As a result, the company logged better profits," said Kamrul Islam, executive director for finance and business development of the steel maker.

Globally, the price of melting scrap, the raw material of steel products, rose to $630 per tonne recently, from $300 to $350 per tonne last October.

Cost control and efficiency also paved the way for the better profit gains. GPH Ispat boosted production, giving a boost to sales, he said.

Because of the higher input costs and unprecedented sea freight rates, the price of the 60-grade rod in Bangladesh rose to an all-time high of Tk 81,500 per tonne, data from the state-run Trading Corporation of Bangladesh showed.

Among seven listed cement makers, six disclosed their financial reports for the quarter. Two producers reported higher profits while it narrowed for two companies.

Mohammed Amirul Haque, managing director of Premier Cement, said most cement manufacturers made profits in the last quarter as the volume of sales rose compared to a quarter ago.

However, the sales volume is yet to reach the pre-pandemic level, he said.

Haque says millers used raw materials that were purchased before the latest price hike in the global market owing to supply shortage, elevated shipping cost and supply constraints.

He warns that the price of cement would increase further as the price of raw materials is increasing continuously in the international market.

"Then, manufacturers will have no other way but to adjust the price."

The EPS of LafargeHolcim Bangladesh, a multinational company, rose 44 per cent to Tk 0.81. Crown Cement, a local company, reported higher earnings.

The EPS of Premier Cement fell 85 per cent to Tk 0.12 in July-September. Confidence Cement also saw its profit decline.

The profit of Meghna Cement has remained the same, while Heidelberg Cement kept incurring losses.

Rajesh Surana, chief executive officer of LafargeHolcim Bangladesh, said his company had delivered yet another exceptional quarter backed by strong cost control and efficiency improvements.

He credited strengthening digital footprint, maximising the market outreach by further getting closer to end customers, relaunching of Supercrete, one of its flagship brands, and driving seamless cost effectiveness programmes for the strong results.

"In addition, our new product launches are highly successful."

Backed by the steady economic development, rapid urbanisation, public infrastructure projects, and the growth of the real estate sector, Bangladesh's cement industry has grown at 11.5 per cent annually in the last decade.

There are 37 active cement factories in the country with a combined annual production capacity of 58 million tonnes against a demand of 33 million tonnes.