Cahya Mata Sarawak’s 4Q net profit drops 90%

By NUR HANANI AZMAN / Pic By www.cmsproperty.com.my

CAHYA Mata Sarawak Bhd’s (CMSB) net profit plunged 90% to RM5.4 million in the fourth quarter ended Dec 31, 2019 (4Q19), compared to RM53.5 million that was reported in the previous year’s corresponding period.

CMSB’s 4Q19 revenue also dropped 8% to RM456.5 million from RM496.8 million that was reported in 4Q18.

The group’s profit before tax also sank 76% to RM20.2 million in 4Q19 from RM83.1 in 4Q18.

The diminished performance was attributed to all the divisions — cement, construction and road maintenance, and property development except for the construction materials and trading division.

For the financial year ended Dec 31, 2019 (FY19), CMSB’s net profit decreased 39% to RM160.3 million compared to RM262.1 million in FY18.

CMSB group MD Datuk Isaac Lugun said the group reported a revenue of RM1.74 billion for FY19, a 2% improvement compared to RM1.71 billion in FY18 as a result of a significant decrease in aggregate contribution from associate companies.

“Lower operating profits from CMSB’s traditional core business divisions namely cement, construction and road maintenance, and property development also impacted FY19 performance,” he said in a statement yesterday.

CMSB’s revenue for cement division in FY19 improved by 8% to RM601.62 million compared to RM557.85 million in FY18.

However, profit before tax declined 19% to RM73.11 million compared to RM90.14 million in FY18, as a result of increased production costs mainly due to scheduled maintenance and higher raw material prices.

Imported clinker prices have increased due to higher demand from the regional market, coupled with reduced supply from China.

To address this issue, CMSB is focusing on improving the clinker plant’s operational efficiency to reduce reliance on imported clinker and hence reducing the plant’s maintenance cost.

On the company’s prospect, Isaac said CMSB is well-positioned to benefit from all key economic drivers in Sarawak, supported by a healthy balance sheet and our three-pronged growth strategy.

“Specifically, this strategy calls for CMSB to firstly, reposition and fortify all traditional core businesses, secondly, to fully implement and grow the strategic businesses and, lastly, to reposition and strengthen the CMS brand,” he added.

Moving forward, he said the cement division will place emphasis on the maintenance of the clinker plant for the next two years in order to prolong the lifespan.

The trading sector is also expected to maintain its revenue from the term contracts with the Public Works Department.

For the property development division, CMSB’s main focus in 2020 will be Bandar Samariang township where the division plans to launch approximately 500 units of single-storey terrace house.

The property development division’s township development project at Samalaju Industrial Park remains challenging in this greenfield development area due to the lack of public infrastructures and amenities, such as schools and hospitals.