Lafarge Malayan Cement books sharply higher annual profit

Lafarge Malayan Cement books sharply higher annual profit
Published: 20 February 2007

Thanks to recovery in domestic cement prices, Lafarge Malayan Cement Berhad has booked pre-tax profit of RM212.095m (US$60.7m) for the 12 months ended 31 December 2006, sharply higher than RM29.345m achieved in the previous year.  
 
Revenue rose 11.3 per cent to RM2,077.893m from RM1,866.668m previously. 
 
Lafarge attributed the improved results to the recovery in domestic cement selling prices from the low level during the intense price war in the first half of 2005, higher export prices and an improvement in industrial performance.  
 
"The results would have been better if not for the higher transport costs due to the removal of diesel subsidies and the higher electricity tariff effective from 1 June 2006," it said in a filing to Bursa Malaysia.  
 
It said the 2005 results were also boosted by the non-operating income, mainly arising from the sale of a marine vessel.  
 
Basic earnings per share for the year rose to RM6.20 from RM1.00 a year earlier.  
 
For the fourth quarter, the group registered a pre-tax profit of RM73.4 million compared with RM55.6 million in the previous corresponding quarter.  
 
Lafarge expects construction activities and cement demand in Malaysia to improve in 2007 underpinned by the 9th Malaysia Plan projects.  
 
Group results for 2007 are expected to improve following the revision in domestic cement prices in late December 2006, it said.  
 
However, the full year impact of the electricity tariff increase (7 months in 2006), higher costs of transport, paper bags and raw materials will trim the favourable price impact.  
 
The group said it welcomed the nine per cent ceiling price adjustment which will improve contributions but the group’s return on invested capital remains unsatisfactory as this increase is still insufficient to compensate for the 40 per cent increase in costs over the past few years.  
 
Construction activities in Singapore are expected to improve with the stronger economy and the implementation of the Integrated Resorts, it said.