Press Metal proposes higher dividend despite 33% drop in 1Q net profit

Kuala Lumpur: 's first quarter net profit fell 33% to RM281.97 million, from the RM421.02 million a year earlier, on lower revenue and contribution by its associated companies. Earnings per share fell to 3.44 sen from 5.21 sen.

Revenue for the quarter ended March 31, 2023 (1QFY2023) fell 21.7% to RM3.07 billion from RM3.92 billion, mainly attributable to the softening of metal prices, said the aluminium smelter.

Despite the drop in earnings, Press Metal has declared a first interim dividend of 1.75 sen per share, payable on June 30, representing a payout ratio of 51%. The group had paid a dividend of 1.5 sen per share in 1QFY2022.

On a quarter-on-quarter (q-o-q) basis, the group's net profit grew slightly by 3.58% from RM272.21 million in 4QFY2022, while revenue declined 21.6% from RM3.92 billion.

Press Metal attributed the increase in net profit to lower freight costs and raw material prices.

Press Metal group chief executive officer Tan Sri Paul Koon said that as a consequence of the subdued economic environment, the price of aluminium has softened in recent months.

“Despite this, the low inventory levels reported by several metal exchanges and ongoing supply curtailments since last year indicate that there is still supply tightness of physical metal in the current market,” he said.

Moving forward, Koon said Press Metal anticipates intermittent disruptions in global aluminium supply to persist, due to high energy costs and challenging weather conditions. Therefore, he said a resurgence in the economy or an acceleration of green industrialisation could rapidly reverse the current weakness.

“Press Metal continues to pursue opportunities while maintaining financial resilience. Our financial health has been consistently strengthening, particularly over the past few quarters, as evident through our higher cash position, reduced gearing, and healthy profitability.

“Building on this foundation, Press Metal will continue engaging and collaborating with strategic partners to enter new markets or embark on new ventures with the aim of achieving sustainable growth and success,” he said.

Press Metal's share price fell 17 sen or 3.47% to RM4.73, valuing the group at RM38.97 billion.

Source : The Edge Markets

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