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[Ferro-Alloys.com]Cahya Mata Sarawak Bhd (CMS) was the top loser, shedding 48 sen to close at RM3.30 after its net profit for the first three months of this year tumbled by 98% to RM1.05mil from RM57.42mil in the corresponding quarter a year ago, weighed down by the company’s cement business.
The cement segment’s profit plunged to RM9.6mil from RM29.4mil or down by 67% despite a 5% increase in the cement selling price from Jan 1 this year.
CMS’s losses were also contributed by losses of RM16.2mil from the share of the results of its associates, largely due to its 25%-owned OM Materials (Sarawak) Sdn Bhd.
OM Sarawak operates a ferrosilicon alloy smelter in Samalaju Industrial Park, Bintulu.
A year ago, its associates posted losses of RM16.16mil in the quarter compared with gains of RM13.73mil a year ago.
Its revenue fell 29.3% RM346.91mil from RM490.99mil a year ago while earnings per share were just 0.1 sen compared with 5.52 sen in the previous year corresponding quarter.
The dismal results were due to a lower sales volume, higher costs both in imported cement and raw materials because of the strong US dollar, costs linked to the commissioning of the new cement plant as well as repair costs on plant shutdown, said CMS in a press statement.
The RM190mil new cement plant, which has an annual production capacity of one million tonnes, is expected to be fully commissioned by this month.
Group managing director Datuk Richard Curtis recently said that as the new plant would boost the company’s cement production capacity by 60% to 2.75 million tonnes per annum, there might be no need for the company to continue importing cement to meet local demand.
The company is exploring opportunities to export cement to neighbouring countries as it would now have the reserve capacity to do so.
Last year, CMS imported some 200,000 tonnes of cement and bought an additional 20,000 tonnes early this year.
Like the cement segment, the company’s construction materials and trading segment posted a 44% drop in profit to nearly RM17mil from RM30.3mil, while the construction and road maintenance segment recorded a 26% decline in profit to RM19.4mil against RM26.2mil quarter-on-quarter.
The company blamed the weaker performance of the various segments to “exceptionally inclement weather” during the quarter under review.
“This has hampered the progress of construction works and quarry production volumes, as well as generally reducing demand for construction materials in the Sarawak market, reflecting the lack of both big new projects and of stringent bank financing to drive demand in the state,” the statement said.
For the property development segment, it reported a 19% jump in pre-tax profit to RM3.2mil from RM2.7mil previously, largely contributed by profit recognition on the sales of completed showroom properties and better performance of the lodges in Samalaju, Bintulu, according to notes to the latest financials.
Curtis said during the first quarter last year the company recorded exceptionally high sales, reflecting both strong local demand as well as sales booked before the implementation of the goods and services tax in April last year.
“Demand for construction materials then normalised, before being dragged down - (no) thanks to both the severe wet weather conditions during the early months of this year and sluggish private and public-sector demand attributable to bank lending restraints and the lack of new big projects,” he added.
Going forward, Curtis said local demand growth is expected to rise again following the recent Barisan Nasional landslide win in the state election.
“With federal elections due by 2018, this demand growth is expected to be further primed by the Government.
“At the macro level, we remain positive on a steady, albeit modest recovery in oil and commodity prices to levels that enable CMS businesses to grow positively,” he added.
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- [Editor:Sophie]
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