Press Metal’s 2Q earnings slip on weaker demand, price

by SHAZNI ONG/ pic by TMR FILE

PRESS Metal Aluminium Holdings Bhd’s earnings for the second quarter ended June 30, 2020 (2Q20), fell 12.46% year-on-year (YoY) to RM90.06 million as aluminium demand and price were impacted following reduced economic activities and shutdowns of industries to combat the outbreak of Covid-19.

The largest integrated aluminium producer in South-East Asia said the escalation of Covid-19 into a pandemic since late March 2020 has affected all countries.

“Majority of the world economies was halted or severely disrupted by enforced quarantines, lockdowns and travel restrictions in the 2Q20,” the company said in a Bursa filing yesterday.

Revenue for the quarter slumped 18.89% YoY to RM1.73 billion due to lower realised aluminium prices compared to last year.

“However, we have existing hedges that partially locked in some favourable pricing and our average selling price in 2Q20 was higher than the average market price. In addition, we also benefitted from lower alumina and carbon anode prices, and lower finance costs,” Press Metal stated.

The company declared a second interim single-tier dividend of one sen per share for the financial year ending Dec 31, 2020, payable on Sept 28, 2020.

For the cumulative six months, Press Metal posted an 11.63% YoY fall in net profit to RM192.63 million while revenue dropped 17.29% to RM3.56 billion.

CEO Tan Sri Paul Koon said 2Q was a very challenging and tumultuous period with the pandemic at its height.

“Over the months, the pandemic situation had improved which coincided with aluminium price recovering in late May and currently back at pre-Covid level,” he said in a separate statement.

Koon noted that there are signs of recovery in global economic activities especially in China, where the company has seen strong aluminium demand among other commodities.

“We believe that price is also supported by the low interestrate environment and the US dollar weakness. We are continuously exploring new markets for our value-added products and will be expanding our presence in South-East Asia due to its economic growth potential and proximity to our plants,” he said.

Demand for value-added products from key markets such as Europe is also expected to recover in the next few months, he added.

Press Metal remains committed to executing its expansion as planned and is targeting to commission the company’s Phase 3 smelter in January 2021.

This will increase the group’s production capacity by 42% to 1.08 million tonnes per annum. The construction of its 25%-owned PT Bintan alumina refinery is in progress and Phase 1 commissioning is expected in the 1Q of next year he said.

Press Metal’s shares closed 1.58% or eight sen lower to RM4.98, valuing it at RM20.11 billion.