Displaying items by tag: Malaysia

Malaysia: Lafarge Malaysia has seen its profit rise by 28% year-on-year to US$16m for the third quarter of 2015. The boost has been attributed to higher sales revenue from its cement segment, improved plant performance, and higher foreign exchange gains. Overall revenue grew slightly to US$155m for the quarter. Lafarge Malaysia commented that the outlook for the construction sector remains positive in 2015.

A common refrain in the notes accompanying multinational corporate balance sheets are the adverse effects of currency exchange rates. So it goes this week with separate complaints from the Cement and Concrete Association of Malaysia and ARM Cement in Kenya. In Malaysia its local currency, the Ringgit, has fallen in value by 24% against the US Dollar since January 2015. The fall has been blamed on low prices for crude oil and for other commodities such as palm oil.

For the cement industry this is creating problems due to imported key inputs such as a coal and gypsum that are paid for in US Dollars. Similarly, clinker imports have risen by 20% as part of the same effect. The government hopes that infrastructure projects will prop up the construction sector for the time being. Local market leader Lafarge Malaysia has concurred with this cautiously. However, it is right to be realistic about the situation, as the problems with the falling value of the Ringgit seem to be reflected in its financial results.

Lafarge Malaysia has seen its revenue fall by 2.5% year-on-year to US$318m for the first six months of 2015 from US$326m for the same period in 2014. Net profit has fallen by 9% to US$32m. This follows a 3.8% year-on-year fall to US$640m for 2014 as a whole compared to US$666m in 2013. The drop in revenue was partly blamed on lower cement prices, aggravated by higher operating costs arising mainly from the increase in input and delivery costs. It also fits with the start of the fall in value of the Ringgit compared to the US Dollar since around the middle of 2014. Lafarge Malaysia's first half-year results in 2014 saw rises in revenue and net profit.

Lafarge Malaysia is far and away the market leader in cement production capacity in the country with a production capacity of 12Mt/yr, giving it a market share of nearly half the country's total capacity of around 25Mt/yr. However, it isn't the only cement producer struggling at present. YTL Corporation reported a 12.7% drop in revenue to US$3.85bn for its financial year that ended on 30 June 2015. Net profit fell by 31% to US$257m. Although the company operates across many business sectors, it too partly blamed the losses on its cement sector. This followed gains in profit, bolstered by its cement business, in the financial year that ended on 30 June 2014.

By contrast Cahya Mata Sarawak (CMS) Cement has benefitted from a construction boom in Sarawak state on the island of Borneo, a region separate from the rest of the country. On-going work on the Pan Borneo Highway has helped sales with other projects on the way. The sole producer with an integrated cement plant in the state ordered a cement grinding plant from Christian Pfeiffer in 2014 with commissioning planned for early 2016. It will be the company's third grinding plant in the state.

The effects of currency depreciation can be seen starkly in the financial results of Lafarge Malaysia and YTL Corporation. Infrastructure spending offers one route out of this as Lafarge are hoping and CMS Cement are experiencing in the relative isolation of Sarawak. However, a sustained low price of oil will test this even for a diversifying economy like Malaysia's. Cement producers in other oil producing nations should take note.

Malaysia: Lafarge Malaysia Bhd has said that it will be able to achieve a targeted level of growth despite the overall subdued economic situation.

CEO Thierry Marie Robert Legrand said this was possible because of continued government spending in several key projects such as the Mass Rapid Transit (MRT) and Light Rail Transits (LRT) lines after the Budget 2016 was announced.

"We are cautiously optimistic of growth this time. The growth has been quite good in the past few years and this is expected to continue," said Legrand. He added that property projects were also continuing and would help it sustain its business.

Malaysia: The protracted slump of the Malaysian Ringgit against the US Dollar, which has plagued importers and harmed consumer sentiment with the threat of imported inflation, has also cast its shadow over the cement industry.

The Cement and Concrete Association of Malaysia (C&CA) Chairman Datuk Yeoh Soo Keng said that some items crucial to the cement industry, such as coal and gypsum, are purchased in US Dollars. "Coal and gypsum, which are important components of our industry, are imported in US Dollars. With the current weak Ringgit levels, this has an impact on the industry," said Yeoh Soo Keng, who is also the CEO of YTL Cement Bhd, a member of C&CA.

Lafarge's former president and CEO Bradley Mulroney said that the weak Ringgit had also impacted imports of clinker. "The import of clinkers has gone up by about 20% due to the impact of the weak Ringgit," he said.

Hume Industries Bhd Managing Director Quah Thain Khan said that cement players are working to mitigate the impact of the weak Ringgit by managing the usage of raw materials, such as coal, more efficiently. "We also negotiate for cheaper sources of coal," said Thain Khan, adding that the industry is also challenged by the increasing cost of foreign labour. "I think that the industry needs to place more emphasis on automation and be less labour-intensive by investing in precast concrete systems and industrialised building systems."

International Trade and Industry Minister Datuk Seri Mustapa Mohamed said that the construction industry would see 'reasonable growth' in 2016, fuelled by infrastructure projects under the 11th Malaysia Plan, such as Mass Rapid Transit Line 2, Light Rail Transit Line 3 and the Sungai Besi-Ulu Kelang Elevated Expressway. "It will not be double-digit growth, but it will be reasonable growth. As for the slow-down in the property sector, the softening is more in the high-end housing segment; the affordable housing segment continues to be reasonably strong," said Mustapa.

Mustapa added that Malaysia's cement and concrete industry is an important economic pillar, contributing about 4% of the country's gross domestic product. "The industry has also contributed to Malaysia's export earnings, with exports to countries such as Australia, Sri Lanka, Indonesia and India, but, at the same time, Malaysia is still a net importer when it comes to clinker." From January to August 2015, Malaysia imported US$81.4m of clinker, compared with US$77.9m in the same period of 2014. "It is hoped that more integrated cement plants will be set up in Malaysia to produce our own clinker and reduce imports," said Mustapa.

Malaysia: Lafarge Malaysia plans to buy Holcim Malaysia, for US$77.3m according to a regulatory filing. The acquisition of the subsidiary of Holcim Indonesia, is expected to be completed the fourth quarter of 2015. It will be paid for using internal funds and borrowing. Holcim Indonesia originally bought the unit for US$37m in 2009.

"The acquisition is also expected to deliver synergies through operational efficiencies, including the increase in economies of scale and bargaining power and reduction or elimination of duplicative functions," said a Lafarge Malaysia spokesperson. The acquisition of Holcim Malaysia will increase the cement production capacity of Lafarge Malaysia from 12.95Mt/yr to 14.14Mt/yr.

Malaysia: YTL Corporation saw a 15.6% year-on-year decline in net profit to US$71.8m for the quarter that ended on 30 June 2015. Its revenue fell by 10.6% to US$987m. YTL Corporation attributed the decline to lower contributions from cement manufacturing and trading, information technology and e-commerce-related business, property investment and development, hotels and utilities.

For the full year that ended on 30 June 2015, YTL Corp's net profit fell from 31% to US$257m, due to lower contributions from cement manufacturing and trading, property investment and development and utilities. During the year, revenue fell by 12.7% to US$3.85bn.

Malaysia: Lafarge Malaysia's pre-tax profit for the first quarter of 2015, which ended on 31 March 2015, rose to US$27.6m from US$26.9m in the same quarter of 2014. Its revenue improved to US$193m from US$188m in the prior year due to higher cement and concrete sales in the domestic market on the back of market growth. The company expects the construction sector to continue to grow in 2015 driven mainly by the continued progress of key infrastructure projects and ongoing commercial and residential development.

Malaysia: Quarrying at Gunung Kanthan, Perak by Lafarge Malaysia has alarmed green groups, who said that work has encro¬ached close to 'sensitive' areas. A small hill within the limestone mountain's southern area was reportedly mined in January 2015. Concern that rocks from Area B where the hill was located would be strewn along the adjacent Area C have caused fears that quarrying there would follow.

Gunung Kanthan, which is home to many endangered species of flora and fauna, is divided into several sections with Areas C and D located in the south. Malaysian Nature Society (MNS) president Henry Goh, who confirmed that quarrying had been conducted on the hill, cautioned that the removal of forestry there would have damaging effects on Areas C and D. Two new flora species were recently discovered in Area C, which is also home to nine species that are on Malaysia's Red List of Endangered Plants.

Goh said that Lafarge Malaysia had assured him that Areas C and D would not be affected. He also claimed that temples embedded in or around the mountain had received evacuation notices. Goh said that a biodiversity report by Universiti Malaya, commissioned by Lafarge Malaysia, had not been revealed.

The International Union for Conservation of Nature (IUCN) has highlighted its concerns to Lafarge chairman Bruno Lafont. "We are concerned to learn that a road is being blasted immediately adjacent to Area C," said IUCN Species Survival Commission chairman Simon Stuart. He stated that Google Earth images showed that the forested valley next to Area C 'is being filled with rubble.'

Lafarge Mal¬aysia vice-president Mariano Garcia maintained that Areas C and D were out of the mining plans. He said that he did not know of the evacuation notices, but that monks and temple staff had entered the quarry site and verbally abused his workers. He also said Lafarge Malaysia had been trying to meet the Forest Research Institute Malaysia (FRIM) to no avail.

Malaysia: Tasek Corp reported a 7.1% drop in earnings to US$6.4m in the third quarter of 2014 amid stiff competition. Earnings declined despite a 3.3% rise in revenue to US$44.4m during the three month period. Tasek said that it suffered lower margins from the cement segment due to intense price competition on the market. For the nine months to the end of September 2014, earning were 16.3% higher at US$23.2m, with revenue climbing by 14.5% to US$144m. Tasek said that the outlook for the fourth quarter of 2014 was expected to remain positive.

Vietnam: In the first seven months of 2014, Vietnam earned US$563m from the export of 13.1Mt of clinker and cement, a 24% rise year-on-year in value terms and a 20.4% increase in terms of volume. Indonesia, Taiwan and Malaysia were the largest importers of Vietnamese clinker and cement in this period, according to the Vietnamese Ministry of Industry and Trade.

Indonesia imported 1.42Mt of clinker and cement (worth US$69m), Taiwan bought 0.86Mt (US$37.6m) and Malaysia purchased 0.7Mt (US$34.7m). Cambodia was fourth with 0.29Mt (US$15.6m).

Vietnam's domestic cement sales are expected to rise by 9% year-on-year to between 49 - 50Mt in 2014, while cement and clinker exports are likely to hit 16 - 20Mt. The country exported 15Mt in 2013.