Malaysia: CMSB 1H16 cement profits down 24%

Cahya Mata Sarawak Berhad (CMSB) has announced its earnings figures for the first half of 2016, including those of its cement division. This recorded a pretax profit of MYR41.7m (US$10.2m) on revenues of MYR275m. Both figures were down on those from the same period in 2015, with profits falling by 24 per cent and revenues 6.6 per cent lower.

Profits fell faster than revenues due to CMSB’s increased reliance on imported clinker following plant shutdowns and the falling value of the ringgit. Cement prices were raised by five per cent at the beginning of the year in an effort to mitigate these factors.  

Dato’ Richard Curtis, group managing director of CMSB, said: “Our performance during the first half of this year has been affected by challenging market and operational conditions. These macro factors included low commodity selling prices, higher costs of raw materials and of imported cement (in 1Q16) resulting from the strong US dollar in the Cement Division, and generally the sluggish private and public sector demand attributable to bank lending restraints and the lack of any new big projects.

"Our confidence in our future prospects is supported by our healthy balance sheet, our experienced management team and our focussed portfolio of core business Divisions which are well positioned to benefit from the State’s ever growing infrastructure needs including the MYR16bn Pan Borneo Highway project which is now kicking off.

“We believe that CMSB continues to be one of the best proxy listed investments for Sarawak’s accelerating economic growth. This is consistent with the State’s promotion of energy intensive industries under the Sarawak Corridor for Renewable Energy (SCORE) initiative and the infrastructure and related services required across the State. These two drivers, which reflect CMSB’s two business focusses, are set to propel the State’s economy and CMSB to new heights in the medium and long term.”