A common refrain in the notes accompanying multinational corporate balance sheets are the adverse effects of currency exchange rates. So it goes this week with separate complaints from the Cement and Concrete Association of Malaysia and ARM Cement in Kenya. In Malaysia its local currency, the Ringgit, has fallen in value by 24% against the US Dollar since January 2015. The fall has been blamed on low prices for crude oil and for other commodities such as palm oil.

For the cement industry this is creating problems due to imported key inputs such as a coal and gypsum that are paid for in US Dollars. Similarly, clinker imports have risen by 20% as part of the same effect. The government hopes that infrastructure projects will prop up the construction sector for the time being. Local market leader Lafarge Malaysia has concurred with this cautiously. However, it is right to be realistic about the situation, as the problems with the falling value of the Ringgit seem to be reflected in its financial results.

Lafarge Malaysia has seen its revenue fall by 2.5% year-on-year to US$318m for the first six months of 2015 from US$326m for the same period in 2014. Net profit has fallen by 9% to US$32m. This follows a 3.8% year-on-year fall to US$640m for 2014 as a whole compared to US$666m in 2013. The drop in revenue was partly blamed on lower cement prices, aggravated by higher operating costs arising mainly from the increase in input and delivery costs. It also fits with the start of the fall in value of the Ringgit compared to the US Dollar since around the middle of 2014. Lafarge Malaysia's first half-year results in 2014 saw rises in revenue and net profit.

Lafarge Malaysia is far and away the market leader in cement production capacity in the country with a production capacity of 12Mt/yr, giving it a market share of nearly half the country's total capacity of around 25Mt/yr. However, it isn't the only cement producer struggling at present. YTL Corporation reported a 12.7% drop in revenue to US$3.85bn for its financial year that ended on 30 June 2015. Net profit fell by 31% to US$257m. Although the company operates across many business sectors, it too partly blamed the losses on its cement sector. This followed gains in profit, bolstered by its cement business, in the financial year that ended on 30 June 2014.

By contrast Cahya Mata Sarawak (CMS) Cement has benefitted from a construction boom in Sarawak state on the island of Borneo, a region separate from the rest of the country. On-going work on the Pan Borneo Highway has helped sales with other projects on the way. The sole producer with an integrated cement plant in the state ordered a cement grinding plant from Christian Pfeiffer in 2014 with commissioning planned for early 2016. It will be the company's third grinding plant in the state.

The effects of currency depreciation can be seen starkly in the financial results of Lafarge Malaysia and YTL Corporation. Infrastructure spending offers one route out of this as Lafarge are hoping and CMS Cement are experiencing in the relative isolation of Sarawak. However, a sustained low price of oil will test this even for a diversifying economy like Malaysia's. Cement producers in other oil producing nations should take note.