KUALA LUMPUR (Feb 22): Malaysia Smelting Corp Bhd (MSC) swung into a net loss in the fourth quarter ended Dec 31, 2017 (4QFY17), dragged down by its tin smelting segment which recorded a pre-tax loss of RM23.4 million due to lower sales volume, lower profit from sale of by-products, higher production cost and operating expenses.

The tin miner and metal producer posted a net loss of RM13.36 million in 4QFY17 compared with a net profit of RM2.38 million a year ago. Loss per share was at 13.4 sen compared with earnings per share of 2.4 sen.

Quarterly revenue declined 9% to RM318.52 million in 4QFY17 from RM350.14 million in 4QFY16, mainly due to lower sales quantity of refined tin and lower tin prices in the current quarter under review.

Nevertheless, MSC is proposing a final dividend of 4 sen per share subject to shareholders' approval at the forthcoming annual general meeting. This represents a dividend payout of 25% of FY17 net profit.

The weak quarterly performance dragged down MSC's net profit for the full FY17 to RM15.93 million, a 53% drop from RM34.33 million in FY16, while revenue contracted 3% to RM1.44 billion from RM1.48 billion.

In a separate statement, MSC said average tin prices grew by 12% to US$20,036 per tonne last year from US$17,867 per tonne in 2016. This led to the group's tin mining segment reporting a 20% rise in net profit to RM34.9 million for FY17.

However, lower recovery of tin from its aged smelting equipment contributed to higher production costs and higher operating expenses. This caused the tin smelting segment to register a net loss of RM20 million in FY17 compared with a profit of RM14.3 million in FY16.

Also contributing to this difference was a favourable inventory valuation adjustment of RM17.4 million in FY16, it added.

Going forward, MSC said market conditions continue to be challenging as the foreign exchange, global commodity and metal prices including tin continue to fluctuate.

"However, the group will continue to focus on operational efficiencies to mitigate these challenges. The MSC group is undertaking efforts to improve on all areas of operations, technology, manpower and logistics.

"Plans to commence full operations in a new plant, using newer and more efficient technology and a more productive work force are also under way. We expect this new plant to be operational in the medium term," it added.

Its chief executive officer Datuk Dr Patrick Yong said its strategy moving forward will remain on executing the rationalisation exercises, as well as seizing new opportunities to drive growth for the group in the coming year.

"We are optimistic on the group's future growth prospects as more discoveries are made for new tin applications. One key area of growth is the use of tin in lithium-ion batteries in electric vehicles. As more countries and major automotive manufacturers prioritise electric vehicles, this will create a robust demand for tin," he added.

MSC shares closed 3 sen or 0.87% lower at RM3.42 today, bringing a market capitalisation of RM342 million.