Lafarge Malayan Cement may expand capacity in a bid to maintain market share as local rivals increase capacity amid rising domestic demand.
The company is the country's leading cement producer and currently occupies a 40 per cent share of the market. Its major rivals are YTL Cement and Cement Industries of Malaysia (CIMA) both of which have planned capacity expansions. New entrant Hume Industries, which has constructed a new 1.5Mta plant, has also stepped up competition on the local market.
We will probably expand.. (but) it needs to be finalised by our board and I can't discuss it in advance," Lafarge Malaysia's president and chief executive officer Bradley Mulroney told Business Times (Malaysia). He added that as market leader, the company has to make sure that it has sufficient capacity to maintain its position.
"We have to plan our investment at least two to three years ahead. At the moment, we are fine but we need to start discussing what we must do next in order to cope with the demand from 2015 to 2017," said Mulroney.
Due to the increased competition, major industry players have taken to giving rebates and bulk discounts as they scramble to protect market share even after raising prices last August. Mulroney expects cement prices to gradually return to a more stable level in the next few months as demand rises in the second half of the year with a number of infrastructure projects announced earlier coming through.
For the year ended December 31 2012, the company reported a 10 per cent growth in net profit while revenue grew seven per cent to MYR2.74bn. Previously, Mulroney told local press that the company remains confident on the Malaysian cement sector outlook in 2013 supported by overall growth in the economy and a positive trend of government projects in the pipeline. He expects a repeat of the 4-5 per cent sales growth seen last year to be achieved in 2013.