Press Metal smelting plant in Samalaju
KUALA LUMPUR: Press Metal Bhd
, which ramped up its aluminium smelting capacity in the middle of last year, recorded a 57% jump in both revenue and earnings in the first quarter (Q1) due the higher output coupled with an improvement in metal prices.
In its latest quarterly financial report to Bursa Malaysia, the country’s largest aluminium smelter announced earnings of RM148.05mil on the back of RM2.02bil in revenue in the quarter ended March 31.
The quarterly earnings were higher than the company’s average annual earnings in the five years prior to 2016 - before its capacity was boosted substantially.
In May last year, Press Metal completed the production ramp-up of its Samalaju Phase 2 smelter (its third smelter in Sarawak), doubling its production capacity there to 640,000 tonnes per year.
Today, according to its latest annual report, the company has the largest aluminium smelting capacity in South-East Asia at 760,000 tonnes per year.
The board has approved a first interim dividend of 1.50 sen per share for the current financial year compared with 3 sen previously.
The lower dividend per share was due to a corporate exercise involving a 1-into-2 share split and a bonus issue completed in November last year, which resulted in earnings per share in Q1 being 45% lower at 3.99 sen.
This latest dividend payout totals RM55.95mil against RM38.96mil a year earlier.
On its current year’s prospects, Press Metal said the board was cautiously optimistic that the group would achieve satisfactory results as its three smelters were running at their designed capacity and the company was making an effort to diversify into more value-added products.
It noted that aluminium prices had risen 11% from an average of US$1,731 per tonne in December last year to US$1,930 per tonne last month.
The delivery premium had also increased from US$95 per tonne in the fourth quarter of last year to US$126 per tonne in the second quarter of 2017.
“The increase in aluminium price was mainly due to the Chinese government’s great concern of its environment and has launched (moves) to reduce the capacity of aluminium production in the country. As such, the market is expecting that the demand and supply for this year will tilt towards a deficit situation,” Press Metal said.
Meanwhile, Press Metal’s 27.7%-owned affiliate PMB Technology Bhd, which makes aluminium products for construction use such as curtain walls and shuttering, reported a lower net profit of RM2.35mil in the first quarter ended March 31 compared to RM2.39mil a year earlier. This was despite revenue rising 36% to RM100.83mil.
PMB Technology attributed the lower profit to the increase in aluminium price, which “was not fully passed on to the customers during the current quarter under review.”
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