CMS added net profit for 1Q16 was also down to RM1.05 million, plunging by 98 per cent y-o-y as compared to RM57.42 million recorded in 1Q15.
KUCHING: Cahya Mata Sarawak Bhd (CMS) recorded lower earnings and revenue for the first quarter of 2016 (1Q16) ended March 2016.
The company in a filing to Bursa Malaysia yesterday said 1Q16 revenue decreased by 29 per cent year-on-year (y-o-y) to RM346.91 million from RM490.99 million generated in 1Q15.
CMS added net profit for 1Q16 was also down to RM1.05 million, plunging by 98 per cent y-o-y as compared to RM57.42 million recorded in 1Q15.
Meanwhile, CMS’s share price was among the top losers at the end of trading yesterday, dropping 48 sen to close at RM3.30 per share with 8.33 million shares transacted.
The share price was believed to have fallen on the announcement of the company’s 1Q16 financial results. The company noted its 1Q16 profit before tax (PBT) was reduced by 76 per cent y-o-y to RM22.91 million as compared to RM95.01 million recorded in 1Q15.
CMS in a statement said its cement division recorded a PBT of RM9.62 million for their contribution towards the group’s results for 1Q16. The company observed that the figure was 67 per cent lower than 1Q15’s exceptional PBT of RM29.37 million and also 53 per cent lower than 1Q14’s RM20.44 million.
It explained that the weak performance was attributed to lower sales volumes, costs linked to its new cement mill’s commissioning, plant shut downs and higher costs both in imported raw materials and cement due to the weaker ringgit.
Its construction materials and trading division reported a PBT of RM16.98 million for 1Q16, a 44 per cent decline in comparison to 1Q15’s exceptional PBT of RM30.32 million but was 37 per cent higher than 1Q14’s PBT of RM12.38 million.
Moreover, the construction and road maintenance division recorded a PBT of RM19.38 million, a decline in comparison to 1Q15’s exceptional profit of RM26.22 million by 26 per cent but was eight per cent higher than 1Q14’s RM17.87 million.
CMS pointed out that all those divisions’ 1Q16 results have been impacted by exceptionally inclement weather during 1Q16 which hampered the progress of construction works and of quarry production volumes as well as by generally reduced demand for construction materials in the Sarawak market, reflecting the lack of both big new projects and of stringent bank financing, to drive demand in the state.
Apart from that, CMS highlighted that the goup also recorded losses of RM16.16 million in 1Q16 from the share of results of its associates due to losses reported by the group’s 25 per cent associate, OM Materials (Sarawak), which operates a ferro silicon alloys smelter in Samalaju Industrial Park where commodity prices have been at record lows.
Commenting on the 1Q16 financial results, CMS Group’s managing director Datuk Richard Curtis said: “Our very subdued performance during the first quarter of this year has been largely determined by challenging market conditions affecting both the global and the Sarawak economies.
“There was no single factor but rather multiple ones that all came together in 1Q16 without any relief either from an outperforming division or a one off profit recognition.
“These macro factors included both low selling commodity prices and higher costs of raw materials and of imported cement resulting from the strong US dollar in the cement division.
“Internally within Sarawak in 2015, there were exceptionally high sales reflecting both strong local demand as well as sales being booked before the advent of the Goods and Services Tax (GST) in 2Q15.
“Demand for construction materials in 2015 then normalised, before being dragged down due to both severe wet weather conditions during the early months of this year and sluggish private and public sector demand attributable to bank lending restraints and the lack of any new big projects,” he observed.