Monday, June 23, 2008

CIMA to increase usage of paddy husk energy

Tuesday June 24, 2008

CIMA to increase usage of paddy husk energy


KANGAR: Cement Industries of Malaysia Bhd (CIMA) aims to gradually increase the use of paddy husk energy from 10% currently to 50% in the near future. Currently it derives 90% of energy from coal.

Managing director Che Halin Mohd Hashim said it was looking at various cheaper alternatives for coal.

“With raw materials prices rising in tandem with the increase in fuel price, CIMA estimates operating cost to increase by 12% to 16% annually,” he said after the company AGM yesterday.

The price of paddy husk is stable at about US$45 per tonne, while coal price is unstable and fluctuates with the volatile oil prices, reaching about US$80 per tonne.

Che Halin said CIMA hoped to increase its paddy husk consumption to 64,904 tonnes for the financial year ending Dec 31, 2008 (FY08) from 33,659 tonnes in FY07.

It planned to improve its production efficiency and segmentise its markets accordingly, he said, adding that it also needed to lower its distribution cost.

Last year, CIMA spent RM23.95mil to upgrade its manufacturing plant in Bahau, Negri Sembilan, to give it an additional capacity of 559 tonnes daily to 4,006 tonnes daily.

CIMA has a production capacity of 2.9 million tonnes of clinkers and 3.4 million tonnes of cement, while its quarry has a capacity to produce 3.2 million tonnes of limestone per annum.

Currently, CIMA is the third largest cement producer in Malaysia with a market share of 17.28%. According to Che Halin, the domestic market was expected to reach 13.5 million tonnes this year.

Under its five-year strategy plan, the company has targeted revenue growth of 15% and return on equity (ROE) of 11% for FY08, against revenue growth of 7% and ROE of 9% in FY07.

The cement production and construction sector was expected to grow 2% this year, Che Halin said.

Going forward, the company hoped to introduce new products, such as blended cement, as a way to reduce its clinker production, Che Halin said, noting that clinker production required high usage of energy.

On the review of its dividend payout policy, chairman Abdullah Yusof said: “We are mindful of improving the dividend rate if our earnings trend is good. However, we need to assess the situation first.”

For the first quarter ended March 31, CIMA posted a pre-tax profit of RM22.1mil against RM16.3mil in the previous corresponding period.

Its revenue increased 13.1% to RM153mil from RM136mil previously.

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