KUALA LUMPUR (Nov 21): Malaysia Smelting Corp Bhd (MSC) slipped into the red in the third quarter ended Sept 30, 2022 (3QFY22) with a net loss of RM31.32 million or loss per share of 7.50 sen, compared to a net profit of RM28.94 million or earnings per share of seven sen in the same quarter last year, due to a sharp decline in tin prices.    

The last time MSC was in the red was in 1QFY20, with a net loss of RM13.19 million due to a write down of inventories, disruption of supply due to Covid-19, and prolonged trade tensions.

Quarterly revenue rose 57.5% to RM344.13 million in 3QFY22, from RM218.48 million previously, mainly due to higher sales quantity of refined tin.

The firm’s tin-melting segment posted a loss before tax of RM61.1 million in the quarter under review, versus a profit before tax (PBT) of RM7 million in 3QFY21, mainly due to a sharp decline in tin prices, longer than expected furnace outage at its Pulau Indah plant due to logistic delay to secure specialised fire rated furnace bricks, and higher operating cost in the form of higher energy, fuel, reductant (anthracite) and furnace rebricking costs.

Its tin mining segment, meanwhile, recorded a PBT of RM10.9 million, down from RM38.7 million in the previous year, on lower average tin prices and a one-off provision for legal case settlement of RM4.7 million in 3QFY22. 

The group’s share of associate and joint venture results posted a net share loss of RM300,000, versus a net share profit of RM100,000.

For the nine months ended Sept 30 (9MFY22), MSC’s cumulative net profit rose 34.23% to RM72.47 million from RM53.99 million, as cumulative revenue grew 35.4% to RM1.11 billion from RM821.5 million.  

“The better group performance in 9M2022 (9MFY22) was mainly due to higher average tin prices of RM148,800 (in 9MFY22), as compared to RM121,500 (in 9MFY21) per metric tonne,” said MSC in a bourse filing.

Regarding the group’s performance, MSC chief executive officer Datuk Dr Patrick Yong said operational costs have risen, as the group recorded higher energy and freight prices due to the prolonged Russia-Ukraine war.

In this volatile macroeconomic environment, Yong said MSC continues to remain vigilant, while focusing on its efforts to strengthen the group’s operational efficiencies. 

“At the Pulau Indah smelting facility, we look forward to higher production yield and efficiency using the more efficient Top Submerged Lance (TSL) furnace technology. We expect to generate cost savings of approximately 30%, with lower manpower and carbon emissions.    

“As for our tin mining arm, we are continuously exploring ways to enhance our mining productivity at the Rahman Hydraulic Tin (RHT) mine in Klian Intan,” said Yong. 

Additionally, the recent acquisition of Asas Baiduri allows MSC to expand RHT’s mining pit further eastwards, contributing to higher mining output, Yong noted.   

“In conclusion, we are strengthening MSC’s foundation to better address the challenges and withstand external headwinds. Nonetheless, tin’s long-term prospects remain positive, as tin has been identified as a key component in emerging technologies, including lithium-ion batteries for electric vehicles,” he added.

MSC’s share price was down 11 sen or 6.36% to RM1.62 at the closing bell on Monday (Nov 21), giving the group a market capitalisation of RM680.4 million. The stock has depreciated 48.73% year-to-date.