KUALA LUMPUR (Aug 18): Press Metal Aluminium Holdings Bhd reported today a 12.46% drop in net profit for its second quarter ended June 30, 2020 (2QFY20) to RM90.07 million from RM102.89 million a year earlier as revenue fell and after the company incurred higher taxation while the aluminium extrusion and smelting industry contended with the impact of the Covid-19 pandemic.

In statements to Bursa Malaysia today, Press Metal said revenue fell to RM1.73 billion in 2QFY20 from RM2.13 billion a year earlier. Press Metal said it incurred higher taxation at RM8.64 million versus RM4.38 million a year earlier.

"The escalation of Covid-19 into a pandemic since late March 2020 has affected all countries. Majority of the world economies were halted or severely disrupted by enforced quarantines, lockdowns and travel restrictions in the second quarter of 2020. With reduced economic activities and shutdowns in industries, both the aluminium demand and price were impacted. Following this, our revenue for 2QFY20 declined by RM403.05 million or 18.9% from RM2.13 billion to RM1.73 billion as compared to 2QFY19.

"The fall in revenue was mainly attributable to lower realised aluminium prices for the quarter as compared to last year. However, we have existing hedges that partially locked in some favourable pricing and our average selling price in 2QFY20 was higher than the average market price. In addition, we also benefitted from lower alumina and carbon anode prices as well as lower finance costs. As a result of this and despite the fall in revenue, our 2QFY20 profit before tax increased by 1.2% to RM124.92 million compared to RM123.47 million in 2QFY19.

"[In quarterly terms] the group's profit before tax for 2QFY20 of RM124.92 million was lower than the immediate preceding quarter by RM18.7 million or 13%. This was mainly due to the weakening of aluminium price during the current year's quarter under review as Covid-19 became a pandemic. In addition, operations at our extrusion and wire rods plants were halted from March 18, 2020 following the nationwide Movement Control Order. Both plants have since resumed operations by stages from mid-May 2020," Press Metal said.

For the six months ended June 30, 2020, Press Metal said cumulative net profit fell to RM192.63 million from RM217.99 million a year earlier while revenue declined to RM3.56 billion from RM4.3 billion.

Despite registering a lower net profit, Press Metal declared a dividend of one sen a share for 2QFY20.

Press Metal said the dividend's ex and payment dates fall on Sept 4 and 28, 2020 respectively.

Looking ahead, Press Metal said today that after a challenging start in the first half of 2020 affecting all countries and industries, the pandemic situation has since improved. The company said the improvement coincided with aluminium price recovery in late May and that prices are currently back at pre-Covid 19 pandemic levels.

"There are signs of recovery in global economic activities especially in China, where we have seen strong aluminium demand among other commodities. We believe that price is also supported by low interest rate environment and the US dollar weakness.

"We remain committed to executing our expansion as planned, targeting to commission our phase-three smelter in January 2021. This will increase our capacity by 42% from 760,000 tonnes up to 1.08 million tonnes per annum. The construction of our 25%-owned PT Bintan alumina refinery is also well in progress and we expect phase-one commissioning in 1QFY21," Press Metal said.

Today, Press Metal's share price closed down eight sen or 1.58% at RM4.98, giving the company a market capitalisation of RM20.11 billion. The stock saw 1.52 million shares traded.