Lafarge Aims To Cement Its Place Here


19 May 2006


By Isabelle Francis

Cement maker Lafarge Malayan Cement Bhd, which swung into the black in the first quarter of the year, expects to continue as the local market leader this year, riding on improved operational efficiency and increased production.

Its chief executive officer Alain Crouy said the company, which commands about 40% market share, plans to increase its current production capacity of eight million tonnes of clinkers and 12 million tonnes of cement.

"We are running at 100% (capacity) now. Capacity will be increased using the current tools, without any additional investment," he told reporters after Larfarge's AGM in Subang on May 19.


"On the marketing side, we would also launch new products over the next few months and years," he said.


Crouy added that the company and other industry players have been in talks with the government to revise the ceiling price of cement of RM198 per tonne (government-controlled price) now.


"Our cost (of production) have increased by 30% in the past 11 years, and we would like (price increase) to be as close as that. But we are not sure that (price) would be feasible to the government.


"Increase in price is to compensate for the (operation's) cost increase which accelerated in the last three years, particularly with regards to fuel," he said.

On its outlook, Crouy said: "The market is growing and in the first quarter, the market has grown over 5%."


"This year, we expect the market to be above last year's. We should be able to control cost better as we don't have the impact of the coal increase, and at the same time with our internal operations efficiency."


However, he believed the infrastructure spending would not impact its business significantly this year, despite the hefty allocation to the construction sector under the Ninth Malaysian plan (9MP).


He said the impact of the 9MP would only be seen from the second half of the year onwards.


Crouy said the company also expects better contribution from its overseas operations, particularly in Vietnam and Singapore.