LHBL BD reported 3Q CY21 NPAT of BDT 937mn (EPS: BDT0.81), implying c43% YoY growth against NPAT of BDT 654mn (EPS: BDT0.56) in 3Q CY 20. In 9M CY21, net profit more than doubled and reached BDT 3,089mn from BDT 1,497mn in 9M CY20. Please note that the first wave of the COVID-19 pandemic hit the financials of the cement industry significantly in 2020. In 2021, LHBL BD has recovered from that position and crossed the pre-pandemic level sales. Sales growth and gross margin improvement have contributed to such growth in the bottom line in the quarter.
Q3 CY21 Revenue stood at BDT 4,602mn, growing by c26% YoY. It is attributable to BDT 4,301mn cement sales and an additional BDT 301mn from the company’s newly added product, Aggregates. LHBL started the commercial operation of the aggregate unit in January 2021. The company added an additional BDT 1,021mn in sales from this new product in 9M CY 21. The contribution of this aggregate unit to revenue was not there in 2020. Please note that LHBL had pent-up demand for cement products in Q3 CY20 after the subdued demand in Q2 CY20 owing to the first wave of the COVID-19 pandemic. On the contrary, the government had imposed 20 days long nationwide lockdown in Q3 CY21, addressing the second wave of the pandemic. The cement sales growth of c18% YoY, despite the long lockdowns in place, in Q3 CY21 is substantial.
However, due to the pressure from a local body of limestone businesses, the Ministry of Industries sent a letter to LHBL instructing the latter to halt the operation of its aggregate wing. They alleged that LHBL was allowed to extract limestone only for clinker production. LHBL filed a plea with the High Court challenging the allegation brought forward.
Q3 CY21 GPM stood at 35.8%, up by 163bps YoY. The price of clinker continued to spiral from Q3 20. After a short-lived price slump, cement makers raised retail prices to pass on the increased costs to customers and to recover quickly from the Covid brunt. This came as a boon for LHBL as it has its own source of raw materials, improving the gross margin of the company.