LafargeHolcim never logged in more profit than it did in 2020

The Bangladesh subsidiary of LafargeHolcim, the world’s biggest cement company, had an outstanding 2020, a year in which demand for the construction material had fallen off a cliff at one point.

LafargeHolcim Bangladesh posted a 36 per cent higher profit of Tk 236.1 crore for its 2020 financial year, which is its highest yet, in a stunning feat given that construction activities were practically on hold for a full quarter for the countrywide general shutdown to slow the spread of the coronavirus.

Cement and steel are considered bellwether sectors of the economy, and Lafarge’s strong showing, as well as the record profits seen by steel giants BSRM and GPH Ispat, suggests Bangladesh’s economic locomotive is back to charging full steam ahead.

The company, which owns four cement plants including the country's only integrated cement maker in Chhatak, saw its sales drop 9 per cent to Tk 1,622.2 crore last year due to pandemic-related disruption, mostly in the first half, before returning to prior-year levels in the latter half of 2020.

Its drop in sales was lower than its Swiss parent company, which saw a decline of 13.4 per cent in 2020.

Despite the drop in sales, LafargeHolcim Bangladesh pulled off record profit thanks to various cost and efficiency improvements, it said in a statement yesterday.

“During the year, our focus on supply chain management, contract negotiations and improved production efficiencies have helped mitigate the impact of softer volume growth,” the statement read.

Fixed costs were also significantly lower during the year. 

The company has demonstrated resilient result with its focus on health, cost and cash, said Rajesh K Surana, chief executive officer of LafargeHolcim Bangladesh.

“Our initiatives to focus on digital and innovation provided further impetus to the outstanding results,” he added.

During the year, the company’s free cash flow, which represents the cash it has available to repay creditors or pay dividends and interest to investors, soared 32 per cent to Tk 365.7 crore.

And yet, it did not reward its shareholders well: it announced a 10 per cent cash dividend for the year, which is the same as in the previous five years.

Shares of LafargeHolcim, which was listed in 2003, gained 32.8 per cent in 2020. On January 14 this year, its share price hit a two-year high of Tk 68.5, after which it hit the slopes.

Yesterday, they closed at Tk 52.6, up 1.5 per cent from the previous day.