Press Metal profit rises 54% in Q1 on higher output, price

Press Metal Bhd, whose shares came under selling pressure in the second half of last month due to concerns of an aluminium glut, posted commendable results for the first quarter (Q1) ended March 31.

The aluminium smelter announced to Bursa Malaysia a 53.9% year-on-year rise in Q1 net profit of RM43.14mil. Revenue increased 17.7% to RM1.056bil from a year earlier.

The higher revenue achieved was due to higher production output from the resumption of its Mukah smelting plant’s operation and higher metal selling price during the quarter.

(The Mukah plant resumed full operation in April 2014 after being shut down in June 2013 due to power outage.)

The group’s operating profit rose in tandem with the higher revenue. “However, due to mark-to-market foreign exchange (forex) loss provision, primarily on our US dollar denominated borrowings, the group reported a profit before tax of RM70.2mil in Q1 2015 after accounting for the RM97mil of unrealised forex loss,” it said.

In the previous corresponding quarter, unrealised forex loss was only RM4.2mil.

On the current year’s prospects, Press Metal downplayed any adverse impact of a possible glut, saying it expected a “satisfactory result for this financial year.”

While it noted that the general business environment remained challenging and commodity prices had fallen this year versus the same period last year, Press Metal added that sentiment seemed to have turned positive recently with oil and other commodities traded at higher prices, including aluminium on the London Metal Exchange.

Going forward, it said the aluminium selling price - LME price plus delivery premium - should be trading at “a reasonable level.”

“Our management will remain focused on improving its operational efficiency and increase its value-added products in order to stay competitive,” the company said.

Press Metal board has approved a first interim dividend of 6% per share, or a total dividend payout of RM38.85mil.

The counter closed 3 sen lower on Wednesday at RM2.85.

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