Mainstream
Cement sector to remain subdued in near term
Ho Chung Teng | 01 Dec 2017 00:30
For the first half-year, Lafarge posted a net loss of RM93.02 mil against a net profit of RM39 mil a year earlier

Fierce competition, depressed cement prices and lack of near-term catalysts are hurting cement producers. As a result, earnings of some companies’ cement units have contracted as much as 53%. It looks like most manufacturers will probably have to wait longer to see a significant recovery.

YTL Corp Bhd is one of the worst hit. Affin Hwang Investment Bank Bhd analyst Ng Chi Hoong says the contribution from the company’s cement segment plunged more than 53%. The research house adds that the sharply lower contribution was a “negative surprise” as it has not foreseen cement oversupply to worsen significantly.

In the last eight quarters, the cement sector has been facing multiple headwinds such as oversupply and low demand, contributing to low prices. A cement distributor tells FocusM that cement manufacturers have resorted to slashing prices to maintain volume, worsening the fierce price war.