Cement makers’ profits jump as govt spending goes up
Profits of listed cement companies rose by 20.38 percent in the January-September period from a year ago due to a rise in demand for cement.
The rise in the number of construction projects in urban and rural areas fuelled the demand, said Mohammed Amirul Haque, managing director of Premier Cement.
The infrastructure projects of government also pushed up demand for the key construction material, Haque said.
The government spending on constructing bridges, culverts and public buildings also marked a rise of 10-15 percent in the last 15 years, he said.
The cement sector registered profits of Tk 388.29 crore during January-September, compared to Tk 322.53 crore in the same period a year ago, according to Dhaka Stock Exchange.
“Our economy is rural based. Earnings and expenditure habit of rural people are increasing, buoyed by remittance inflows and growing non-farm economic activities, as a result consumption of cement is also rising,” Haque said.
More than 50 percent of the locally produced cement is used for construction purposes in rural and sub-urban areas, he said.
“We are planning to set up a factory in North Bengal,” he said. “We are working to explore new market thanks to rising demand.”
Premier Cement saw the highest profit at Tk 39 crore during the period, a surge by 288 percent from the same period a year ago.
“My company could register 500 percent growth in profit in the absence of political instability in the country during the period,” he said.
There are seven listed cement-makers, of which five logged profits during the period, while two experienced losses, DSE data showed.
Construction works of government usually grow during the last year of government’s tenure, pushing up demand of the item in both rural and urban areas, said Abdul Quayum Miah, executive member of Bangladesh Cement Manufacturers Association.
“Sales of cement are rising slowly,” he said.
The prospects of the cement industry in a developing country like Bangladesh are bright, LankaBangla Securities, a stockbroker, said in an analysis on the cement sector.
“We have seen the construction sector grow at a compound annual growth rate of 13.55 percent in the last 10 years. Also the sector has grown at a CAGR of 9.73 percent since 2005,” it said.
The per capita cement consumption in Bangladesh is very low compared to the world average, the analysis said.
“The per capita consumption in Bangladesh is only 83kg, while it is 174kg and 131kg in India and Pakistan respectively.”
“It indicates that our cement consumption will go up in line with our economic development,” the analysis added.
The total cement production capacity in Bangladesh is around 2.5 crore tonnes a year, while the demand is around 1.5 crore tonnes, with a surplus of one crore tonnes.