Lafarge Malayan Cement Bhd said its second-quarter to June net profit fell to 24.83 mln rgt from 37.71 mln a year earlier after sales dipped to 443.38 mln rgt from 447.45 mln, with domestic demand for cement easing as a result of slower construction activities. In the notes accompanying its results, the company attributed the slower construction activities to the supply constraint in steel bars and the completion of several large infrastructure projects.
"The lower cement demand led to keener competition and resulted in lower domestic selling prices during the current quarter. Lower production output, higher repairs and maintenance costs (partly due to timing of scheduled shutdown) and higher fuel costs also affected the current quarter results," it added.
Going forward, the company said "construction activities and cement demand are not expected to get better before the end of the year although the recent announcement of an additional development expenditure allocation by the government may help to trigger an improvement in construction activities." While plant performance is expected to improve, efficiency gains are likely to be negated by rising fuel prices and other material costs, it added.
"With all the foregoing factors militating against the industry, it is not expected that the performance of the group for the current financial year will improve over that of last year, especially as the result of the second half of last year was boosted by a high level of construction activities," it said.
