Press Metal posts RM409m 2Q net profit on strong US dollar, higher metal price; declares 1.75 sen dividend

KUALA LUMPUR (Aug 25): Higher metal price and production output, as well as the appreciation of the US dollar against the Malaysian ringgit boosted Press Metal Aluminium Holdings Bhd's earnings in the second quarter ended June 30, 2022 (2QFY22).

The aluminium company posted a 60.1% increase in net profit to RM409.17 million in 2QFY22 from RM255.58 million in 2QFY21, while quarterly revenue rose 51.8% to RM4.01 billion from RM2.64 billion, its bourse filing on Thursday (Aug 25) showed.

Press Metal announced a second interim dividend of 1.75 sen per share, payable Sept 29, higher than the one sen declared in the corresponding period of the preceding year.

The group attributed the higher metal production output to its Phase 3 smelter, which achieved full operations last October.

Meanwhile, the strengthening of the US dollar against the ringgit increased its revenue, as the sale of its aluminium products were mainly denominated in US dollars.

Profit before tax (PBT) also increased by RM189.39 million or 50.3% from RM376.81 million to RM566.20 million, partly due to better return from associate companies which are mainly engaged in the production of silicon, alumina and carbon anodes.

Cumulatively, net profit in the first half ended June 30 (1HFY22) ballooned 79.97% to RM830.19 million from RM461.3 million, as revenue soared 67.21% to RM7.93 billion from RM4.74 billion.

Macroeconomic uncertainty and inflationary pressures are causing a slowdown in demand as consumers adopt a more cautious approach over the short term, said Press Metal group chief executive officer Tan Sri Paul Koon.

However, he believes aluminium market fundamentals should be able to withstand any aggressive challenges, as soaring energy prices and power shortages limit supply, especially in Europe.

Several smelters have reported production curtailments or shutdowns in Europe and US, pressured by margin squeeze at the current aluminium price level due to escalating production costs.

Meanwhile in Asia, the extreme weather experienced by India and China is another supply risk for primary capacity, as governments seek to prioritise the supply of electricity to households.

“For the remainder of the year, in addition to improving production efficiency, the group will continue to take advantage of the pockets of growth from various markets in the regional countries.

“Barring unforeseen circumstances, the board expects the group to achieve a satisfactory result for financial year 2022,” Koon added.

Press Metal, which is currently trading at a historical price-to-earnings ratio of 32.45 times, closed at RM4.89 on Thursday (Aug 25), up 5.16 or 24 sen. At its close, the group had a market capitalisation of RM40.29 billion.

Year-to-date, the counter has fallen 13.6% from RM5.66.