Lafarge banking on government plans

Lafarge banking on government plans
Published: 21 August 2006

Lafarge Malayan Cement Bhd (LMC) is banking on fast implementation of the Ninth Malaysia Plan (9MP) projects, the Government’s approval to raise cement ceiling price and new products to improve its performance this year. 
 
In the first quarter ended March 31 2006, LMC returned to the black with RM13.29 million net profit from RM13.43 million of net loss posted in the same period of 2005. Its revenue increased by 14 per cent to RM476.07 million from RM418.15 million.
 
Chief executive officer and president Alain Crouy noted the Government’s assurance to effectively execute 9MP projects will augur well for cement manufacturers.  "The cement industry is ready to take full advantage of a growing domestic market. Market demand and prices have stabilised since the second half of 2005 and are likely to sustain going forward," he said.
 
When asked on future investments, he replied LMC is unlikely to invest in capacity expansion unless there is an increase in the RM198-per-tonne cement ceiling price.  Crouy said the Cement & Concrete Association of Malaysia had submitted the request in May 2005 and is awaiting reply from the Ministry of Domestic Trade and Consumer Affairs. 
 
"At the current controlled price, there is no justification for additional investment as our production costs have increased substantially in the past few years. The last cement price hike was in 1995," he said. 
 
"On top of the 12 per cent increase in electricity rates by Tenaga Nasional Bhd two months ago," he said "manufacturing subsidies for electricity rates had also been reduced by two per cent. Therefore, we are are now paying 14 per cent more in our electricity bills." 
 
Crouy was speaking to reporters after Deputy Minister in the Prime Minister’s Department Datuk Abdul Rahman Suliman launched the Avancrete brand of cement held in Kuala Lumpur recently. With contractors seeing the benefits of quick-dry Avancrete cement, he expects LMC’s performance for the current year to be better than previously. 
 
LMC is the biggest cement supplier in Malaysia, leading with 44 per cent market share. This is followed by YTL Cement Bhd (24 per cent), Cement Industries of Malaysia Bhd (16 per cent) and Tasek Corp Bhd (13 per cent).