This article first appeared in The Edge Financial Daily, on May 25, 2016.
KUALA LUMPUR: Lafarge Malaysia Bhd, which saw its latest quarterly performance hammered by intense competition in the construction material industry, is ready to face more competition as it has the capability to produce high-value cement and concrete that are not widely available in the industry, said president and chief executive officer Thierry Legrand.
Legrand said there is niche demand in the industry, particularly in infrastructure projects that specifically require Lafarge’s products.
“We are well positioned, on top of our merger with Holcim (M) Sdn Bhd, which gives us an edge with a wider network and cost savings. We are ready for more intense competition,” he told reporters after the company’s annual general meeting yesterday.
Last November, Lafarge completed the acquisition of Holcim from PT Holcim Indonesia Tbk for RM325.5 million, ramping up Lafarge’s annual installed cement capacity to 14.14 million tonnes, from 12.95 million tonnes before the acquisition.
Currently, Legrand said, Lafarge has three integrated cement plants, two grinding stations, over 40 ready-mix concrete batching plants and six aggregate quarries.
On Monday, the group released its first quarter ended March 31, 2016 (1QFY16) results, which saw its net profit tumbling 72% to RM20.65 million, from RM73.69 million a year ago, on lower contribution from its cement segment, following continued price competition. Revenue slipped 3.8% to RM669.78 million, from RM696.09 million a year earlier.
“Our 1QFY16 earnings were [also] affected by [a] slower construction market as some of the old projects were completed. The second reason was because of the exceptional integration cost of Holcim,” Legrand explained, but declined to provide any guidance on Lafarge’s upcoming financial results.
“We are aware that there are some infrastructure projects in the pipeline that are about to start in the second half of this year, and we are always there to tender for projects where we have a presence,” he said.
“From the industry’s perspective, from Lafarge’s, we are putting a lot of effort in more cost savings and continuing to supply better products to our customers. When supply is abundant, we need to demonstrate that our offer is different from our competitors,” he added.