MSC earnings tumble on stronger ringgit

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.

PETALING JAYA: Malaysia Smelting Corp Bhd’s (MSC) earnings tumbled by nearly 64% year-on-year (y-o-y) in its first quarter ended March 31, mainly due to the stronger ringgit.

The tin miner and metal producer said in a filing with Bursa Malaysia that its net profit in the first quarter had fallen to RM4.58mil compared to RM12.62mil a year earlier.

Although MSC has benefited from the increase in average tin prices in the first quarter and the improvement in the group’s production and sales volume, the benefits were offset by the ringgit’s appreciation against the US dollar.

As a result, this has lowered MSC’s bottom line in the quarter in review.

The Main Market-listed company registered an overall revenue of RM356.95mil in the first quarter, down by 12.21% y-o-y from RM406.61mil in the corresponding period last year.

Segmental performance-wise, MSC’s tin smelting business posted a RM2.2mil pre-tax loss in the first quarter compared to a pre-tax profit of RM5.4mil a year earlier.

This was mainly due to reduced sales quantity of refined tin, lower recovery yield and higher operating expenses.

Meanwhile, the company’s tin mining segment recorded a lower pre-tax profit of RM9.6mil in the quarter in review, as the higher tin prices in US dollar were offset by the ringgit strengthening against the greenback during that period.

In comparison, the tin mining segment registered a pre-tax profit of RM14.7mil in the first quarter of 2017.

In a separate statement, MSC chief executive officer Datuk Patrick Yong said the performance of the group’s tin smelting division continued to be affected by the inefficiencies of aged equipment at its Butterworth smelting facility.

This had resulted in higher operating expenses and production costs due to lower recovery yields.

“Furthermore, operating costs have increased as the group has commenced small-scale refinery work as part of the testing and commissioning at its new plant in Pulau Indah, Port Klang.

“As we are in the early stages, we will be operating both smelters concurrently until the new smelter reaches a stable state,” it said.

Yong said MSC is confident that its performance would improve when it commence production at the Pulau Indah plant and phase out production at the Butterworth plant.

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

MSC’s earnings per share dropped to 4.6 sen in the quarter in review compared to 12.6 sen a year earlier. It did not declare any dividend for the first quarter.