Press Metal reports higher earnings in Q2 on higher aluminium price and strong US dollar

Press Metal Aluminium Holdings Bhd, the largest aluminium smelter in South East Asia reported 7% increase in earnings in Q2 2018 on higher selling price for aluminium and aluminium products. The company, in its statement Wednesday said that its Q2 performance was also buoyed by a stronger US dollar.

The group completed the acquisition of Leader Universal Aluminium Sdn Bhd (LUA), the largest aluminium and alloy rod producer in Malaysia in March, wherein its revenue was consolidated into the group in Q2 2018.

These positive fundamentals were partially offset by increased raw material prices caused by alumina supply disruptions from Brazil.

Q2 net profit at Press Metal climbed to RM160.6mil compared with RM150.2mil in Q2 2017. Revenue also increased by almost a quarter to RM2.4bil from RM1.9 billion YoY. For H1 2018, its net profit jumped 4.3% to RM311 million, against RM298 million a year ago, while revenue increased 17.3% to RM4.56 billion, from RM3.89 billion in H1 2017.

Press Metal’s group CEO Tan Sri Paul Koon is firm on his value-added expansion plans for the company to cope up with growing demand.

 “The increased capacity in both our value-added and extrusion businesses is in line with our plans to expand into new markets,” he said. “With more diversified coverage, we will be able to mitigate susceptibility to jurisdictional policies.”

The group also has a joint venture with Sunstone Development Co Ltd in China to develop a pre-baked carbon anode plant, one of the raw materials for its aluminium smelters. The plant is under construction and on-track for commissioning in Q4 2018.

“Our plan to increase our value-added products from our smelting operations is panning out well and we are on our way to achieve 50% contribution by the end of the year,” Koon said.

He thinks the value added expansion will help the company earn better margins and strengthen Press Metal’s position in the market and branding in the long run. The company has also increased its aluminium extrusion capacity in both Kapar and Foshan plants by approximately 30%.

“We are still on a growth path and evaluating suitable opportunities for inorganic expansion,” Koon said.

the group expects to achieve similar results for the rest of the year unless there are any unforeseen disruptions in the domestic and international aluminium market.