SHAH ALAM (May 24, 2013): Lafarge Malayan Cement Bhd, the country's largest cement producer, with a market share of 40%, has no plans for any merger and acquisition (M&A) at the moment, as it wants to concentrate on organic growth, said its president and CEO Bradley Mulroney.
This is despite the entry of new players, which has sparked a price war in the market.
"No (plans for M&A). We are quite happy with our market positioning, our market presence and market size," he told reporters after the group's AGM here yesterday.
Mulroney said Lafarge expects to maintain its leading position in the market.
"Clearly, you can see the impact of price volatility in our results in terms of the profitability of our business. (But) we believe our results will remain satisfactory (moving forward)," he said.
In the first quarter ended March 31, 2013, Lafarge's net profit dropped 16.2% to RM54.3 million from RM64.8 million a year earlier due to lower domestic cement prices.
Mulroney said even though the cement price war is showing signs of stabilising, "it is wrong to say that the price is totally stable".
"If there is a new entrant in the market, people (cement players) are going to react in different ways. Our view is that that reaction is not very constructive to the market. When you have volatility, it makes the ordering pattern volatile as well," he said.
Mulroney hopes that cement prices will return to normal as continued volatility affects customer service levels as well.
While keeping its eye on expanding its capacity, he said, Lafarge remains positive on the domestic market on strong demand due to the ongoing infrastructure projects implemented under the Economic Transformation Programme (ETP).
"We saw continued growth in construction activities driven by the government-led investments and infrastructure developments such as the roll-out of the Tun Razak Exchange and the next phase of the mass rapid transit line as well as further developments in Iskandar Malaysia," Mulroney said.
He said Lafarge will continue to introduce innovative products and solutions into the market to promote sustainable construction in Malaysia and to ensure that sustainability remains integral to its operations.
Mulroney said domestic demand for cement and other building materials should continue to grow while the outlook for the export market is expected to be stable.
He added that the group is constantly evaluating prospective demand across Southeast Asia.
"Right now we are going through various options in terms of expansion and we have not finalised the option yet. We are confident with the growth prospect in the domestic and overseas markets," Mulroney said.