KUALA LUMPUR: Malaysia Smelting Corp Bhd (MSC) saw its net profit for the second quarter ended June 30,2020 down by 88% to RM894,000 compared with RM7.48mil a year ago.
Revenue for the quarter under review stood at RM144.65mil against RM289.08mil in the previous corresponding quarter.
It said earnings were affected by lower contribution from the group’s tin mining and smelting segments, which were impacted by lower average tin prices and the temporary closure of operations due to the containment measures imposed by the government in an effort to curb the spread of the Covid-19.
The average tin prices at the Kuala Lumpur Tin Market for the second quarter declined by 19% to US$15,848 per tonne from US$19,662 per tonne in the same quarter last year.
In the first half of the year, the group recorded a net loss of RM12.3mil, mainly due to an inventory write down of RM14.0mil recorded in the first quarter and the disruptions in both the mining and smelting operations brought about by the MCO. Revenue for the period was at RM350.0mil, 41% lower than RM596.5mil in the previous year.
CEO Datuk Patrick Yong said: “The second-quarter financial results reflect the full impact of Covid-19 with temporary plant shutdowns for half of the quarter, further reducing the group’s production severely.
“Our performance was also impacted by the disruption to the tin industry’s supply and demand chain as governments imposed border controls and quarantine lockdowns.”
Nonetheless, he said as governments around the world gradually reopened their economies, it remained cautious on the developments and continued to focus on strengthening its core operations and capabilities to withstand external headwinds.
“Our rationalisation efforts continued to gain momentum as we edge closer to the commencement of commercial production of refined tin at our new smelting facility at Pulau Indah, Port Klang, in the third quarter. The Pulau Indah plant houses the more advanced smelting technology using the Top Submerged Lance furnace, resulting in significantly higher extractive yields with improved operational and cost efficiencies, while reducing our carbon footprint.
“Until smooth operations are achieved at the Pulau Indah facility, we will be operating two smelting plants concurrently resulting in duplication in expenses. We expect our financial performance to improve as we phase out production at our current smelter at Butterworth, Penang.”
As for its tin mining activities, he said it continued its initiatives to increase overall mining productivity.
At the Rahman Hydraulic Tin mine in Klian Intan, efforts are underway to boost the daily mining output, in addition to exploring new tin deposits. Meanwhile, it is exploring potential joint-venture mining arrangements to enhance mining activities.
As at June 30,2020, total bank borrowings increased 28% to RM342mil, from RM266.2mil as at Dec 31,2019, due to the drawdown of short-term trade borrowings for working capital.
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