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 18 CEMENT DIVISION In 2016, the Cement Division’s revenue and cement sales declined on the back of a significant reduction in construction activities within the State of Sarawak. As the global economy moderated in the first half of 2016, emerging economies like Malaysia too began to feel the effects of softening growth. Sarawak too was not spared the effects of waning growth with construction activities in the State reaching their lowest levels in four years by the third quarter of 2016. Against this backdrop, revenue for the Cement Division dropped by 6.3% to RM563.07 million in FY 2016 (FY 2015: RM600.89 million). However, the Division was able to maintain a healthy PBT level of RM105.00 million, albeit a modest 1.8% increase over FY 2015‘s PBT of RM103.17 million. The Division’s steady PBT performance was mainly attributable to the commencement of operations of the new integrated cement facility at Mambong which led to a huge reduction in cement imports. The Division’s ability to nimbly adapt to the year’s challenging environment saw it successfully maintaining the cost of sales at the desired level by managing resources and overheads more efficiently, as well as by implementing tighter controls on the production and distribution fronts. In keeping with our role as Sarawak’s leading infrastructure facilitator, as well as a responsible ally to the State Government of Sarawak’s construction industry, we focused our efforts on providing a sufficient supply of quality cement at reasonable and stable prices in 2016. Moving forward into 2017, the Division shall continue to look for ways to further improve operational efficiencies in view of the weak market conditions in Sarawak. CEMENT OPERATIONS CMS’ cement operations are managed by CMS Cement Sdn Bhd and CMS Clinker Sdn Bhd which produce the CEM1 42.5N grade (MS EN 197-1 standard) of Portland Cement. The Cement Division operates three grinding plants, two in Kuching and one in Bintulu, as well as bulk terminals in Sibu and Miri. These plants supply the terminals with cement via purpose-built all-weather barges equipped with fully-enclosed pneumatic self-loading and unloading systems. Through the plants (which today have a total rated annual capacity of 2.75 million tonnes or MT), and the terminals (which are outfitted with packing and bulk distribution capabilities), the Cement Division is able to ensure all of Sarawak’s main centres of economic activity, namely Kuching, Sibu, Bintulu, Miri, THE GROUP’S CEMENT DIVISION, COMPRISING CMS CEMENT SDN BHD, CMS CLINKER SDN BHD AND CMS CONCRETE PRODUCTS SDN BHD, IS ONE OF CMS’ LARGEST PBT CONTRIBUTORS. BEING THE SOLE CEMENT AND CLINKER MANUFACTURER IN SARAWAK, THE DIVISION CONTINUES TO MAINTAIN A STEADY GROWTH MOMENTUM ON THE BACK OF STRENGTHENING INFRASTRUCTURE AND CONSTRUCTION ACTIVITIES WITHIN THE STATE. REVENUE FY 2016 RM 563.07 million PROFIT BEFORE TAX FY 2016 RM 105.00 million