Malayan Cement Bhd is confident that demand for cement will rebound this year on expectation of an improvement in the construction industry given the boost from the government's economic package.
The company holds about 45% share of the local cement market.
Its president and chief executive officer Quah Thain Khan said: Although the impact on the construction industry may not be as immediate and direct as the two previous packages, the various measures, particularly for home ownership, will help reduce property overhang and translate into increased construction activities and cement demand.
The cement industry experienced a difficult environment in the 2nd half of last year as a result of labour shortage, lower cement sales and lower selling prices.
With the extra boost from the economic package, we expect domestic demand this year to reach about 70% of the total capacity produced by major players compared with 65% last year, Quah told reporters after the company's AGM in Petaling Jaya yesterday.
At the AGM, shareholders approved the companys proposal to change name to Lafarge Malayan Cement Bhd.
Quah said the name change would better reflect the company's identity as a member of the world's leader in building materials, Lafarge Group while still remaining very much a Malaysian-based company''.
He said the challenges this year include the need to further reduce production costs as well as the current surplus in clinker demand.
There is a real need to cut costs in view of the fixed ceiling price of cement, Quah said, adding that the last time the government approved a price increase was in 1995.
Quah said the company, through Lafarge's expertise and experience, was seriously looking at reducing its costs, particularly of fuel (coal), which represented a huge cost component to the group.
We are sourcing for other alternatives to coal which can reduce our operational costs and which are environmentally- friendly.
Malayan Cement has an installed production capacity of eight million tonnes of clinker annually. Last year, it exported 30% of its output.
Quah said Malayan Cement was now the market leader with integrated plants in Rawang, Kanthan and Langkawi, a grinding plant in Pasir Gudang and a dry mix cementitous product plant in Rawang.
It also operates a bulk import terminal and dry-mix cementitious product plant in Singapore.
In the 1st quarter ended March 31, Malayan Cement incurred a pre-tax loss of RM6.99mil compared with a pre-tax profit of RM13.65mil in the previous corresponding quarter.
Quah said the company was not overly concerned'' with the first quarter results as it was busy with plant maintenance during the period, which led to lower production.
He expects the 2nd quarter to show better results. In fact, we are set to perform satisfactorily this year on expectation of improvement in cement sales over the next three quarters.