KUALA LUMPUR: Tin miner and metal producer, Malaysia Smelting Corporation Bhd's (MSC) net profit doubled to RM16.1 million for the second quarter financial year 2019 (2QFY19) ended 30 June 2019 from RM7.0 million in the same period previous year.
The growth was on the back of improved performance from both tin smelting and tin mining divisions.
The Group’s tin smelting division posted a lower net loss of RM2.9 million in the first half of 2019 (1HFY19), as compared to a net loss of RM6.0 million in the same period last year, mainly attributable to lower provision of tin loss.
The Group’s tin mining business recorded a 38 per cent year-on-year (YoY) increase in net profit to RM18.7 million from RM13.5 million in 1HFY19, resulting from higher average tin prices in RM terms.
According to the Kuala Lumpur Tin Market, average tin prices in 1HFY19 were marginally lower at USD20,332/tonne as compared to USD20,922/tonne in 1HFY18.
However, the appreciation of the US Dollar against the ringgit led to higher average tin prices in the local note terms during the period.
MSC group chief executive officer Dato’ Dr Patrick Yong said the business environment is expected to be challenging for the remaining half of 2019 with the prolonged and escalating trade war between the US and China affecting major Chinese electronics and smartphone manufacturers, leading to lower demand for tin solders which has affected the tin price.
"However, we remain focused on executing our ongoing initiatives to better position the Group against these external headwinds while capturing opportunities as they arise.
“The upgrading progress of the Group’s new smelting plant in Pulau Indah, Port Klang remains on track for completion in 2020, where the facility will be
fully-operational with ISASMELT technology," he said in a statement.
Patrick said currently, initial testing and commissioning works are being performed at the Pulau Indah smelter.
"As such, we expect to incur increased overheads with a duplication of expenses with the running of two plants concurrently with only the Butterworth smelter generating revenue.
"Upon full commissioning of the Pulau Indah smelter, the Group’s recovery yields are expected to significantly improve with lower manpower and operational costs,” he said.
Patrick also said for its tin mining business, the company will continue endeavours to enhance tin mining productivity at its Rahman Hydraulic Tin mine in Klian Intan, Perak, in addition to exploring new tin deposits.
"Additionally, we look forward to the commencement of mining activities at Sungai Lembing, Pahang, in the second half of 2019, which will contribute to the Group’s overall tin production,” he said.
For the current second quarter, MSC’s net profit grew three-fold to RM7.5 million from RM2.5 million in the previous year’s corresponding quarter.
The tin mining segment drove earnings growth, registering a net profit of RM11.6 million in 2QFY19.
Meanwhile, the tin smelting division reported a net loss of RM4.3 million, impacted by the operating inefficiencies at the Butterworth plant, resulting in lower recovery yields and higher operating expenses for the quarter.
As at 30 June 2019, total bank borrowings increased to RM300.3 million, from RM293.0 million as at 31 December 2018, due to drawdown of short-term borrowings for working capital purposes.
The Group’s gearing ratio remained unchanged at 0.8 times.