KUALA LUMPUR (May 23): Lafarge Malaysia Bhd, the country's largest cement manufacturer, saw its net profit fall nearly 72% to RM20.65 million in the first quarter ended March 31, 3016 (1QFY16), from RM73.69 million a year ago, on lower contribution from its cement segment, following continued price competition.
One-off Holcim integration costs also affected earnings, its bourse filing today showed.
"The higher share of loss in an associate, coupled with higher depreciation charges and higher finance cost arising from the borrowings raised late last year to fund the acquisition of Holcim Malaysia, also contributed to the group's lower profit before tax," it said.
Its interest income of RM600,000 for the current quarter was also lower, compared with RM1.9 million in the corresponding quarter last year, due to lesser amount of funds placed on short term deposits.
Quarterly revenue, meanwhile, slipped 3.8% to RM669.78 million, from RM696.09 million a year earlier, mainly attributed to lower sales contribution from its cement segment, due to stiff competition in the market and continued pricing pressures.
It also declared a first interim dividend of three sen, five sen lower as compared with last year's eight sen per share. The dividend is payable on July 27.
Going forward, the cement manufacturer said it perceived signs of a slowdown, though the outlook for the construction sector remains positive in the mid-term, with continued progress in key infrastructure projects, as well as on-going commercial and residential developments.
"Stiff competition and pricing pressures continue to pose a challenge for the cement industry," it added.
Nevertheless, the group will continue its efforts on differentiation, and in developing solutions and offerings to meet customer needs in the building and infrastructure segments.
"At the same time, there will be continued focus on enhancing efficiency of its overall operations," it said.
Lafarge Malaysia shares closed up 16 sen or 1.96% at RM8.46 today, bringing it's market capitalisation to RM7.19 billion.