Press Metal plant in Samalaju, Sarawak
KUALA LUMPUR: Increased output and higher metal price boosted Press Metal
Aluminium Holdings Bhd’s core business profit by more than a third in the second quarter (Q2) ended June 30, 2017.
The largest integrated aluminium producer in South-East Asia said that excluding the extraordinary gain of RM45.02mil in the same quarter last year, its pre-tax profit showed a year-on-year growth of 35.8% to RM209.31mil.
That significant increase reflected the 31.1% jump in revenue to RM2.08bil, which was mainly due to the additional production output generated by its Samalaju phase 2 smelting plant and higher metal price in Q2, it told Bursa Malaysia.
Aluminium price saw a 2.8% increase from an average of US$1,852 per tonne in Q1 2017 to an average of US$1,905 per tonne in the quarter under review.
“The increase in aluminium price was driven up by the curtailment policy from China due to pollution concern surrounding Beijing. As such, the market is expecting that the demand and supply for the year to tilt towards a deficit situation,” Press Metal said in a media statement.
In Q2 last year, Press Metal’s bottom-line was inflated by the receipt of the final insurance compensation payment of RM45.02mil from MSIG Insurance (M) Bhd in relation to a May 17, 2015 fire at its smelting plant in Samalaju Industrial Park, Bintulu, Sarawak. (The total insurance claim recovered amounting to RM115.02mil was paid out in phases.)
With the insurance claim included, Press Metal’s pre-tax profit still showed a growth - 5.1% - while earnings inched up 2.8% to RM150.17mil.
As for the first half of the year, the company said earnings rose 23.9% to a record high of RM298.22mil as revenue soared 42.6% to RM4.1bil.
The board has approved a second interim dividend of 1.5 sen per share, or about RM56mil, for the financial year ending Dec 31, 2017 (Q2 FY16: 3 sen). The total interim dividend for the year so far is 3 sen, compared to 6 sen a year ago.
Commenting on the results, group chief executive officer Datuk Paul Koon said: “We are very pleased of our record profit in the first half of 2017, which is our first year running on designed smelting capacity of 760,000 tonnes per annum. We are continuing our efforts to enhance plant efficiency and expand on our value added product lines to further increase our margins.”
He said the company expected the commissioning of Samalaju Port and the shortened distance of the new coastal road from Mukah to Bintulu Port to have positive impact to its profitability moving forward.
“With this, we will further maximise efficiency and reduce inland transport costs by installing a conveyor belt linking our smelter directly to the Samalaju Port, which is expected to be operational by end 2017,” Koon said.
He was optimistic on the world’s top aluminium producer China’s supply reform policy, as the aluminium market had been negatively impacted by “disruptive supply growth from private and illegal smelters in China over the last few years.”
“The July data also points to a considerable slowdown in China’s aluminium output of 2.69 million tonnes, from 2.93 million tonnes in June, according to the National Bureau of Statistics. If annualised, this is 9% or almost 3 million tonnes less supply from China alone.
“The supply cut will be further aggrevated by the implementation of winter policy around 28 cities in China, which demands smelters to halt 30% of output. Being the largest producer and consumer of aluminium, China’s curtailment policy will drive alumimium price higher,” he said.
Aluminium contract at the London Metal Exchange (LME) recently breached the US$2,000 mark.
Press Metal said its smelting operations would continue to run at full capacity for the remaining of the year with demand continuing to be well supported.
“We will remain focused on expanding our value-added products and improving the overall operation efficiency,” it said.
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