Cahya Mata Sarawak's earnings fall by about half in Q2

KUALA LUMPUR, Aug 27 -- Cahya Mata Sarawak Bhd (CMSB) reported a lower net profit of RM41.33 million in the second quarter ended June 30, 2019, compared with RM91.63 million in the same period last year.

The operating profit of its cement business fell nearly 37 per cent to RM20.67 million due to higher clinker and repair costs while the share of results of associates slid 68 per cent to RM12.36 million.

Revenue, however, improved to RM399.17 million from RM395.28 million previously, it said in a filing with Bursa Malaysia today.

For the first half-year, net profit declined 37 per cent year-on-year to RM82.09 million although revenue increased nine per cent to RM817.35 million.

CMSB attributed the lower six-month profit mainly to weaker profits from its 25 per cent-owned associate, ferro alloy smelter OM Materials (Sarawak) Sdn Bhd, which contributed 89 per cent lower share of profit of RM5.31 million.

“The lower profit was due to the recent weak commodity prices and the ongoing global trade war which has been impacting the entire industry,” it said.

Group chief executive officer (corporate) Datuk Isaac Lugun said although OM Material’s prospects in the immediate-term were challenging mainly due to the macro-economic factors, the group remained confident on its longer-term prospects due to its position in the first quartile of the global production cost curve, coming mostly from the competitive power price offered in Sarawak, and its strong global presence.

“Once the market rebounds, we believe that OM Materials will again post a similar stellar financial performance it did in 2018,” said Lugun.

He said the group also remained positive on its other associate companies, including Sacofa Sdn Bhd, Kenanga Investment Bank Bhd and KKB Engineering Bhd, which are part of its strategic investments to drive the next wave of growth.

“The aim of this growth strategy is for our traditional core businesses and our strategic investments to counter-balance each other and, in the long term, to equally contribute to double the group’s earnings,” added Lugun.

-- BERNAMA