CIMA hit by higher output cost

Malaysia’s third largest cement producer Cement Industries of Malaysia Bhd (CIMA) suffered a net loss of RM14.89 million for the first quarter of the year, buoyed by an increase in its production cost.   CIMA’s preceding year recorded a net profit of RM6.42 million for the same quarter ended March 31 2004.   CIMA told Bursa Malaysia Bhd yesterday that the price increase of fuel and coal resulted in higher production cost for the company.   It also said the intense price competition among the cement manufacturers for market share had led to higher selling and distribution expenses and this had also contributed to the loss.  

The group’s revenue for the quarter grew by 10 per cent to RM128.57 million compared with the same period last year, driven by higher volume of local sales.  However, in comparison with the preceding quarter, its revenue for the current quarter was 12 per cent lower.   "Lower demand due to slowdown in construction activities during the festive season, namely the Chinese New Year celebration in February 2005, contributed to the lower revenue," it said.  

CIMA expects the price competition to continue for the whole year and the coal and fuel price increase will further depress its margins and affect its performance.  The group said its current challenge is to continue to strengthen its market position in the cement sector.