Tin producer MSC posts lower Q1 earnings

Pursuant to the completion of the proposed share split, the company will also offer a bonus issue of up to 200 million new subdivided shares on the basis of one bonus share for every one split share. (File pic shows workers at the tin smelting plant in Penang.

KUALA LUMPUR: Tin miner and metal producer Malaysia Smelting Corp Bhd (MSC) says the high cost of starting a new plant to impact its earnings this year.

Already, the higher cost had contributed to the 64% drop in net profit to RM4.58mil in the first quarter ended March 31 compared with RM12.62mil made a year ago.

Revenue declined to RM357mil from RM406mil previously as the group’s performance was impacted by the stronger ringgit exchange rate against the US dollar.

MSC, in a filing with Bursa Malaysia today, warned that market conditions continue to be challenging as the foreign exchange, global commodity and metal prices including tin continue to fluctuate.

It said a new plant, using newer and more efficient technology and a more productive work force are under way. The new plant will be “operational in the medium term.”

“We are confident that the group’s performance will improve when we commence production at the Pulau Indah, Port Klang plant and phase out production at the Butterworth plant,” its chief executive officer Datuk Patrick Yong said.

“Once the new smelter is fully operational, we expect recovery yields, production and cost efficiencies to be enhanced significantly,” he added.

In the meantime, As the company progressively move its operations to the new plant, it expects overheads to increase with only one generating revenue.

This higher overhead cost, it said, will impact its financial performance for “this and the next financial year.”

During the quarter under review, MSC’s tin mining division contributed a profit before tax of RM9.9mil whilst the tin smelting division recorded a loss before tax of RM2.2mil for 1QFY18.