Lafarge Continues To Recover From Tough 2005, Says CEO

20.05.2006
 

20 May 2006

 

SUBANG: Cement manufacturer Lafarge Malayan Cement Bhd is looking forward to a "significantly better year", and is on track to meet its targets for the current financial year.  

 


The company, said chief executive officer and president Alain Crouy, continued to recover from a challenging 2005 marked by a cement price war in the first half and margins squeeze arising from higher fuel and coal prices. 

 


"We expect the cement market to be better now and should be able to control costs better as we won't feel the impact of coal price increases. We also made efficiency improvements in our internal operations as well," he told reporters after the company AGM yesterday. 

 


The company hopes that domestic demand will grow following last year's construction slowdown, although Crouy admitted: "We have not yet seen the real impact of the 9MP." 

 

He said the company should be able to maintain or lower production costs, and expected to increase production without additional investment. 

 


The company, he said, might increase exports, as prices had risen due to the tightening of supply in the international cement market. "However, we expect the market in Malaysia to grow in the coming year, and we may accompany that growth and reduce our exports accordingly," he added. 

 

The company, which has a 40% share in the domestic market, has identified power costs as a factor that may have impact on its performance this year.  

 

Like other cement companies, Lafarge is also hoping that the Government would revise the ceiling price of cement soon. "Our costs, particularly of fuel and transportation, increased by 30% in the past 11 years, but the ceiling price had not changed during that time. 

 

"Currently, cement prices are close to the ceiling, and have adjusted since last year's price war. In 2006, I would expect the stability of cement prices to be sustainable," he added. 

 

On market talk that Lafarge could be involved in a merger and acquisition, Crouy said the company had no plans for such a transaction.  

 

For the first quarter ended March 31, Lafarge turned around with a pre-tax profit of RM18.9mil on RM476.1mil in revenue, compared with a RM21.5mil pre-tax loss on RM418.1mil in revenue in the same quarter a year ago.