Energy sector helps Confidence Cement post first quarter profit

The electricity business of Confidence Cement Limited – a Chattagram-based Confidence Group company – helped the company post an overall profit in the July-September quarter of this fiscal year, despite losses in its core cement business.

Its power business achieved a profit of Tk29 crore during the period.

According to the company’s unaudited financial statements, Confidence Cement suffered a loss of Tk 9.49 crore, even after recording 17% sales growth to Tk 77.83 crore in the first quarter.

The company said in its financial statements that during the first quarter of the current fiscal year, its cement production increased alongside an increase in raw material prices. But the company was unable to fix its selling price for cement at its raw material price due to intense competition in the sector.

Therefore, at the end of the first quarter, its earnings per share fell 32% to 2.32 Tk due to losses in the cement business.

However, during the last financial year, Confidence Cement made a profit on its cement business after suffering losses during the three preceding consecutive financial years.

According to the Bangladesh Cement Manufacturers Association (BCMA), cement production depends on the price of clinker, a raw material used to produce cement. Since Bangladesh has to import clinker, periodic fluctuations in international market prices can increase production costs.

BCMA data shows that the annual cement demand is around 33 million tons while the capacity is 78 million tons in the country.

In the 2019-2020 annual report, Rezaul Karim, president of Confidence Cement, said he would establish a third unit with an annual production capacity of 1.5 million tonnes near Dhaka.

Confidence Cement Limited was established on May 2, 1991 and went into commercial operation in 1994. At present, the company has an annual production capacity of 12 lakh tons.

The company was listed on both stock exchanges in 1995 and paid a handsome dividend to shareholders each fiscal year from its investment income.

Despite the Covid-19 situation, the company recommended a 25% cash dividend to shareholders for the last fiscal year.

From October to November, its stock price fell 31% to 112.9 Tk on the Dhaka Stock Exchange. However, in December, its share price rose 8% to 121.9 Tk. At the end of Wednesday’s trading session, its share price stood at 121.20 Tk per share.

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