Bangladesh cement profitability falls in 1Q18

The Bangladeshi cement industry reports a fall in profit due to the increase in raw material cost despite an increase in sales volumes of 12 per cent in 1Q18. The earnings of listed cement companies at the Dhaka Stock Exchange declined moderately for January-March quarter of 2018 as compared to the same period of the previous year as profit margins were squeezed. Cement companies saw tighter margins due several factors, including higher raw material prices, while cement prices have not increased in line with higher production costs. 

Of the seven listed companies, one witnessed a loss while the earnings per share (EPS) of five others declined moderately for the period compared to 1Q17. Only one company reported increased EPS for the January-March quarter.

According to Masud Khan, CEO of MI Cement: "The price of 1t of clinkers rose to US$53 from US$40 while the transport cost rose 66 per cent, leaving an adverse impact on the profit margins," he said and added that the depreciation of the local currency against the US dollar is also a reason behind the fall in last quarter's earnings.

However, he expressed hope that the earnings of cement companies would increase in the next quarter as the manufacturers increased the cement price by some extent.

Bangladesh saw a 12.2 per cent growth in import of clinker in financial year 2017 to US$644m from US$574m of last fiscal year, says data of Central Bank.