CAHYA MATA SARAWAK ANNUAL REPORT 2016

www.cmsb .com.my Section 03 P E R F O RMAN C E 2 0 1 6 Cahya Mata Sarawak Berhad 12 CHAIRMAN’S STATEMENT Y A M TAN SRI DATO’ SERI SYED ANWAR JAMALULLAIL Group Chairman CHALLENGING MARKET AND OPERATING CONDITIONS The year 2016 brought with it a much weaker macroeconomic environment characterised by low commodity prices, a prolonged downturn in the oil and gas industry, slowing growth in China and a lacklustre US economy. This was further compounded by major political developments in the form of Brexit and the US presidential elections, all of which cast a pall upon the global economic landscape. Malaysia was not spared the vagaries of the marketplace either, with the Ringgit continuing to slide against major currencies throughout the year. Amidst moderating domestic demand and consumer spending, Malaysia’s GDP grew at a much slower pace, dropping to 4.2% against 5% GDP growth in 2015. Meanwhile, Sarawak turned in an economic growth of just 4% (against projected growth of between 6%-7% per annum from 2016-2020), opting to revive growth levels by running a budget deficit for the first time in 14 years. The challenging market and operational conditions in 2016 impacted many companies including CMS. On top of the slew of macro factors, a strong US dollar which led to higher costs of raw materials and imported cement adversely affected our Cement Division while also causing hedging losses at the Group’s 25% associate, OM Materials (Sarawak) Sdn Bhd during the first half of the year. Adding to this, sluggish private and public sector demand as a result of bank lending restraints, coupled with the lack of new large projects and exceptionally inclement weather during the first quarter of 2016, all meant a reduction in demand for construction materials in Sarawak. DEAR SHAREHOLDERS, IN 2016, YOUR COMPANY, CAHYA MATA SARAWAK BERHAD (CMS OR THE GROUP),WEATHERED EXTREMELY CHALLENGING MARKET AND OPERATING CONDITIONS TOTURN INA STEADFAST PERFORMANCE. I AM PLEASED TO SAY THAT DESPITE BEING WEIGHED DOWN BY MACROECONOMIC PRESSURES IN THE FIRST HALF OF THE YEAR, OUR GROUP DEMONSTRATED THEIR RESILIENCE AND MADE A RETURN TO SUSTAINABLE PROFITABILITY BY THE YEAR END. REVENUE FY 2016 RM 1.55 billion PROFIT BEFORE TAX FY 2016 RM 302.14 million