Lafarge Wants Cement Price Review


17 May 2008


SUBANG JAYA: Lafarge Malayan Cement Bhd has asked the Government to consider the Cement & Concrete Association of Malaysia's (CCAM) request to review the price ceiling for cement. It has also asked for the implementation of the proposed automatic price mechanism (APM) to battle rising cost of raw materials.


Newly appointed president and chief executive officer Bi Yong Chungunco said the company fully supported CCAM's proposal as the cement industry was facing a tough time containing costs in producing cement for the local construction industry.


"The 9% increase in the ceiling price approved by the government in 2006 had only partly offset the 40% increase in costs suffered by the industry over the past few years," she said after the company AGM yesterday.


Chungunco attributed Lafarge's performance in 2007 and the first quarter of this year to improved cement demand growth, especially in Peninsular Malaysia, and cost control measures.


For the year ended Dec 31, 2007, its net profit jumped 64% to a record RM284.2mil compared with RM173.3mil previously.


In the first quarter ended March 31, Lafarge registered RM66mil in pre-tax profit, against RM59mil a year ago.
Chief financial officer Yeoh Khoon Cheng said rising costs continued to be an industry-wide challenge as cement makers' profit margins were eroded due to escalating fuel price.


"Coal, transportation, cement paper bags and other materials have all gone up in price," he said, adding that if adjustments to rising raw material costs were not made, the local cement industry would be significantly affected.
Lafarge commands slightly over 40% share of the local cement market.


About 70% of its output is sold domestically, and the balance 30% exported to Indonesia, Bangladesh and Sri Lanka.


On future plans, Yeoh said Lafarge was looking to invest RM100mil in a grinding mill, which is expected to be operational by 2010.