CMS Cement Industries raises cement prices for the first time since 2016: First adjustment in six years due to significant rising costs

Kuching (Sarawak), Saturday, 12 February 2022 - CMS Cement Industries Sdn Bhd ("CMSCI"), a wholly-owned subsidiary of Cahya Mata Sarawak Berhad ("CMSB" or "the Group"), has announced today that the price of cement will be adjusted by an average of 10% (subject to product types and location) effective 17 February 2022 due to significant and sustained rising cost of raw and packaging materials and freight charges. Over the year cement production cost has increased by an average of 9% and, in view of the current macro-environment, CMSCI expects its production costs to continue on an upward trend.

CMSCI has had to raise the price of cement after absorbing cost increases over the last six years as there has been a steep rise in global dry bulk freight rates, with the benchmark Baltic Dry Index showing rates having risen by 64% in 2021 while the sack kraft paper index has risen by 33% during the same period, which in turn has increased packaging costs for the cement industry.

Following the price adjustments, the average unit price of cement in Sarawak remains competitive compared with other regions in Malaysia, especially now as prices of cement in both Sabah and Peninsular Malaysia have been increasing over the last several months. As a further comparison, the prices of other building materials such as steel have also surged across the board since January 2021. The Building Materials Cost Index (BCI) has increased by 2.3% in Peninsular Malaysia, while the BCI saw increases of 2.1% and 1.5% in Sabah and Sarawak respectively during this period.

Since 2016, CMSCI has maintained the selling price of cement and absorbed any increases in production costs due to its commitment to supporting the development and growth of Sarawak's infrastructure, but the recent rise in costs makes increasing the price of cement unavoidable in order to sustain the quality of its products and services. CMSCI intends to maintain its customer-centric and supplier-focused role as the leading provider of quality cement in Sarawak while sustaining excellence in operations.

Moving forward, CMSCI plans to further expand its range of eco-friendly cement products in the market. In addition to the Portland Limestone Cement (PLC 32.5N) launched in 2019, CMSCI will also be launching the Portland Composite Cement (PCC 42.5N) in the second half of 2022. PCC 42.5N is categorised as blended cement and features the same strength class as the Portland Cement 42.5N. Through these product offerings, CMSCI is able to provide customers with a range of cement product types to meet their various project requirements at different price points.

At the Group level, CMSB remains committed to supporting Sarawak's development plans including the vision of becoming a developed State by 2030. As one of the key local private sector investors and a major supplier of construction materials and services in the State, the Group reassures all stakeholders that the price adjustment was implemented only after careful deliberations.