The sector as a whole is not as fortunate
Five of the seven listed cement makers saw improved financial performance between July and September last year as the economy returned to a version of normalcy after a two-and-a-half-month-long general shutdown to flatten the curve on coronavirus.
Confidence Cement, which unveiled its first-quarter results yesterday, logged in profit of Tk 28.9 crore, up 77.8 per cent from a year earlier.
Similarly, Premier Cement’s profit shot up a whopping 95.5 per cent in the three months to September, while LafargeHolcim Bangladesh’s increased 31 per cent.
Meghna Cement’s net profit surged 32.8 per cent year-on-year during the quarter.
HeidelbergCement Bangladesh, one of the largest manufacturers of top-quality cement in Bangladesh, narrowed its losses during the quarter: it stood at Tk 2.7 crore, down from Tk 14.3 crore a year earlier.
The company, whose brands include Ruby Cement and Scan Cement, announced no dividend for its last financial year, a first since its listing in 1989.
The sector as a whole was not as fortunate.
MI Cement Factory and Aramit Cement though did not see as brisk a business.
Aramit Cement, a Z-category stock, saw its losses widen about 80 per cent from a year earlier, while MI Cement’s profit dropped 11 per cent in the first quarter of the 2020-21 financial year.
“Our business suffered terribly in the first six months of 2020 and many fell into trouble,” said Md Alamgir Kabir, president of the Bangladesh Cement Manufacturers Association (BCMA).
The sector had witnessed degrowth of about 13 per cent in the first five months of 2020, according to data compiled by the industry.
With the reopening of the economy on May 30, the sector’s business recovered to some extent but it did not return to pre-pandemic levels.
The demand for cement in the local market is returning thanks to the various mega projects of the government and the spike in remittance inflows, said Md Shahidullah, vice-president of the BCMA.
Last year, $21.9 billion of remittance flew in, which is the highest yet, according to data from the Bangladesh Bank.
“If the situation stays this way, we are hoping our business will return by the first quarter of 2021,” Kabir said.
Subsequently, the cement manufacturers last month requested the BB to extend the ongoing moratorium period on the payment of loan instalments by another six months as a cushion to fight the economic fallout of the pandemic.
“Global economies are passing through recession due to the unprecedented impacts of the pandemic and Bangladesh’s economy is also hit hard. But we do not know when it will be over,” said the letter dated December 22 and was signed by Kabir.
The BB had previously introduced a loan moratorium facility for borrowers to save them from becoming defaulters due to non-payment of instalments.
The ongoing moratorium facility, which is set to expire on December 31, helped the sector to turn around.
“The sector is trying to bounce back but the facility will expire later this year. In the given context and considering the present status of the economy and trade, we are urging for an extension of the facility until June 2021.”
If extended, the industry, as well as the economy, could strongly recover from the pandemic's fallout, said the letter dated December 22.
Meanwhile, the cement manufacturers claimed that the non-bank financial institutions are charging 13 to 15 per cent interest on lending, which increased their cost of doing business.
“The high-interest rate is leaving the entrepreneurs at risk and hindering economic growth. Unless the interest rate is reduced, we would not remain competitive in business.”
Subsequently, they called for the implementation of a 9 per cent lending rate for the NBFIs too.