MALAYAN CEMENT’S latest financial performance reflects the balancing act facing Malaysia’s construction materials sector — strong demand and improved efficiency on one hand, but mounting fuel and production cost pressures on the other.
While the country’s largest cement producer continues to benefit from operational improvements and growing demand for specialised concrete products, analysts at RHB caution that rising coal prices and softer production levels could temper momentum in the coming quarter.
RHB expects a relatively softer quarter ahead in quarter four financial year 2026 (4QFY26), on the back of lower cement production, coming from a high base and higher coal costs, while Malayan Cement monitors the baseline average selling prices for now.
Note that periods mentioned in this report is based on the financial year.
Quarter three 2026 core profit rose marginally by 2% quarter-on-quarter (QoQ) to MYR244 mil, bringing the nine months of financial year 2026 (9MFY26) earnings to MYR686 mil.
The higher year-on-year (YoY) profit in 9MFY26 was mainly driven by higher turnover in the ready-mixed concrete and dry mix divisions, alongside lower operating costs.
In quarter three this year, the cement & clinker segment (65% of revenue) delivered a broadly flat performance, due to lower sales volume but offset by higher average selling prices of MYR395/tonne.
Segment earnings before interest and tax (EBIT), however, was up 9% QoQ to MYR311 mil, supported by improving efficiency amid marginally higher coal costs.
This brought the segment’s EBIT margin to 31% in 9MFY26 compared to 26% a year ago.
For the concrete business, sales were down 4% QoQ, likely due to lower construction activities during the festive season, while EBIT fell 9% QoQ to MYR61 mil.
9MFY26 coal costs are 14% lower YoY, at USD65-66/tonne and management expects quarter four coal costs to be relatively stable, as it still has low-cost coal stock from before the Middle East conflict – the impact of the conflict is estimated to be felt from quarter four onwards.
However, LMC noted that it has procured 2-3 months’ coal inventory at USD90 for quarter one of 2027, while keeping its MYR20/tonne rebates intact.
“Based on our estimates, every USD10/tonne increase in coal prices could reduce earnings by 5-6% pa and lower EBIT margins by 130bps, assuming minimal cost pass-through and a sustained increase in coal prices,” said RHB.
However, RHB is still largely positive on its cost-control initiatives, as its earnings before interest, tax, depreciation and amortisation margins enjoyed a QoQ uptick to 35.3% in quarter three this year despite higher coal (+3%) and electricity costs (+8%). —May 29, 2026
Main image: YTL Corporation Bhd
