Lafarge Malaysia: No immediate plans to increase cement prices


The Sun Daily
Liew Jia Teng


26 February 2014


PETALING JAYA (Feb 26, 2014): Lafarge Malaysia Bhd, the country's largest cement manufacturer, has no immediate plans to increase cement prices, despite the hike in electricity tariff this year, said its president and CEO Bradley Mulroney.


"I wouldn't say it is an urgent need to increase price. But when the input cost is going up, of course we will have to review on monthly basis," Mulroney said in a joint-interview here yesterday.


The last cement price hike by Lafarge was in August 2012, when it increased by RM20 per tonne.


"It will be wrong to say this (the power tariff hike) is not a concern. We will work on maintaining energy efficiency in the our operations, and see how much we can absorb. But right now, the answer is no," he replied to the question on whether Lafarge has plan to increase its cement selling price.


On another note, Lafarge saw its net profit improved by 22.3% to RM129.84 million in fourth quarter ended Dec 31, 2013 (Q4 FY13), from RM106.13 million a year ago, driven by higher sales volume in cement, concrete and aggregates, in line with growth in market demand.


Its revenue grew by 8.8% to RM750.57 million, from RM690.15 million a year before.


The group has declared a fourth interim single tier dividend of 17sen per share.


For the full year, Lafarge's net profit rose by 10.5% to RM386.19 million, compared to RM349.49 million a year ago. Its yearly revenue grew by 4.1% to RM2.85 billion, up from RM2.74 billion a year before.


Mulroney attributed the group's performance to construction activities taking place, as well as improved efficiency from its plants.


"We are optimistic about the continued growth in demand for building materials and solutions, while we believe that our businesses remain strongly positioned in these sectors," he said.


Going forward, Mulroney foresees a positive outlook for the construction sector, driven mainly by the continued progress of government-led investments and key infrastructure projects as well as on-going residential and commercial developments.


"The market is fairly well-oriented. Malaysia has a young population and we see the demographic need for housing activities, so there's a lot of growth to go," he said.


Last year, cement segment contributed 81% to Lafarge's revenue, the remaining 19% from concrete and aggregates segment.


Headquartered in the Klang Valley, Lafarge has a network of facilities that include three integrated cement plants in Langkawi, Kanthan and Rawang, a grinding station in Pasir Gudang, more than 30 ready-mixed concrete batching plants and 6 aggregate quarries throughout Peninsular Malaysia.


On cement production, Mulroney said Lafarge is expanding its capacity in the Rawang and Kanthan plants, which are expected to provide additional capacity of 1.2 million tonnes by 2015.


Lafarge has a current production capacity of 12.9 million tonnes, with the extra capacity from Rawang and Kanthan, the capacity is sufficient for the group until 2018, said Mulroney, adding that the cement volume is expected to grow by 2-5% this year.


"We are in a highly capital intensive industry, we have to continue investing to increase production capacity," he said.

However, Lafarge has no plan to raise fresh capital from the capital markets at the moment, as the group currently has access to cheap financing, said Mulroney.


Currently, the zero-gearing Lafarge is in a net cash position of some RM300-400 million.


In March 2014, Lafarge will launch its first fully enclosed ready-mixed concrete batching plant in Chan Sow Lin, followed by another plant in Sungai Buloh.


Lafarge's construction development laboratory in Petaling Jaya will also be completed in June this year.