Press Metal Q2 profit rises 7%
Higher aluminium prices, stronger greenback lift company’s performance
PETALING JAYA: South-East Asia’s largest aluminium smelter Press Metal Aluminium Holdings Bhd’s net profit for its second quarter to end-June rose 6.9% to RM160.6mil on the back of higher aluminium prices and a stronger US dollar.
Offsetting these were external factors such as increased raw material prices caused by alumina supply disruptions from Brazil.
Earnings per share (EPS), thus, increased to 4.15 sen from 4.02 sen previously.
Revenue jumped 24.67% to RM2.44bil for the quarter, mainly due to higher metal prices.
For the period, the company has declared a second interim dividend of 1.5 sen.
This is the same amount it had declared in the same period of the previous year.
As of June 30, the company had cash and cash equivalents of RM203.71mil from RM287.85mil in the previous corresponding period.
For the six-month period, meanwhile, net profit rose 4.31% to RM311.08mil on the back of a 17.32% increase in revenue to RM4.5bil.
EPS, thus, increased to 8.05 sen from 8.02 sen before.
Total dividends declared are, therefore, three sen, the same amount as in the previous corresponding period.
In a statement, group chief executive officer Tan Sri Paul Koon said external uncertainties continue to exist in the global supply chain as a result of United States tariffs and sanctions, and this is amplified by the ongoing alumina supply disruptions.
“Internally, we continue to strengthen ourselves vertically through our joint venture (JV) with Sunstone Development Co Ltd in China for the manufacturing of prebaked carbon anodes, which is a key raw material for our smelting activities.
“The plant is under construction and on-track for commissioning in the last quarter of 2018. Our plan to increase our value-added products from our smelting operations is panning out well, and we are on our way to achieving 50% contribution by the end of the year.
Aside from providing better margins, this will entrench our position directly with end-users to strengthen our position and branding in the long run,” said Koon.
On Sept 20, 2016, Press Metal announced that it had entered into a JV agreement with Sunstone Development, whereby the group agreed to participate in the establishment and operation of a new JV company, namely, Shandong Sunstone & PMB Carbon Ltd Co in China for the primary purpose of manufacturing pre-baked carbon anodes.
The group had on Jan 22 this year injected 52.8 million yuan (approximately RM32.4mil) being the investment cost for this JV, and currently, the plant construction is in progress.
He added that Press Metal had also increased its extrusion capacity in both its Kapar and Foshan plants by an aggregate of approximately 30%.
The increased capacity in both its value-added and extrusion businesses are in line with its plans to expand into new markets.
With more diversified coverage, Press Metal said that it would be able to mitigate susceptibility to jurisdictional policies.
“It is normal for all businesses to face challenges, but we seek to thrive within such circumstances. We are still on a growth path and evaluating suitable opportunities for inorganic expansion,” said Koon.
In a separate filing, Press Metal said it had appointed Lim Hun Soon@David Lim as an independent and non-executive director.
Lim had served in KPMG from 1978 to 2011 and has directorships in several companies, which include Affin Hwang Investment Bank Bhd and Kawan Food Bhd.