Lafarge Malaysia Bhd expected to return to profitability in FY18

Excess supply and price pressure due to escalating competition have negatively impacted Lafarge Malaysia Bhd’s earnings in the current financial year. The company has posted three consecutive quarterly losses, with the 3Q17 resulting in a loss of MYR42m (US$10.3m) according to The Star.

In the first nine months of 2017 ended 30 September, Lafarge Malaysia reported a net loss of MYR135m, a decline from the MYR42.7m net profit of the year-ago period. Revenue also dropped 13 per cent YoY to MYR1.67bn for the same period.  The company’s results are not expected to improve for the remainder for the financial year.

"There has been a visible slowdown in the property market but urbanisation rate is growing and Malaysia has a young population, thus creating a strong need for affordable housing. Therefore, in the mid-term, we hope the property market will improve," said Thierry Legrand, CEO of Lafarge Malaysia.

"The construction market should also improve with the large-scale transport and infrastructure projects gaining momentum.

"These combined factors should be favourable for the cement industry in general and also for Lafarge in the medium to longer term."

Whilst it has no plans to expand production capacity, the possible increase in demand has led analysts to believe the company will return to profitability in the second half of FY18.