KUALA LUMPUR (May 27): The weakening of metal price and persistently high raw materials costs ate into Press Metal Aluminium Holdings Bhd’s profit.

Nonetheless, the group remains optimistic of its prospects amid the expectation that the demand for aluminium products would outstrip supply.

The aluminium product manufacturer’s net profit declined 23.51% in the first quarter ended March 31, 2019 (1QFY20) to RM115.11 million against RM150.48 million a year ago.

Quarterly earnings per share (EPS) shrank to 2.89 sen in 1QFY20, from 3.9 sen in the previous corresponding quarter. The group has approved the first interim single tier dividend of RM50.3 million or 1.25 sen per share, down from 1.5 sen in 1QFY18. The ex-date falls on June 14.

However, its quarterly revenue came in slightly higher at RM2.17 billion despite lower selling price, up 2.16% against RM2.13 billion last year after taking into account the consolidation of results by Press Metal Aluminium Rods Sdn Bhd following the completion of its acquisition in 2QFY18.

Moving on, Press Metal expects a correction in raw material prices “with the imminent resumption of alumina production in Brazil”.

“We have already witnessed a decline in carbon anode prices from the high of 4,000 renminbi to around 3,300 renminbi per tonne,” it said.

Meanwhile, Press Metal also expects demand to continue outstripping supply this year on the likelihood of high raw material costs and subdued metal prices environment  discouraging new investments or restarts — hence constraining supply.

“We foresee that the current trade tensions will continue to post uncertainty on near-term demand and this is reflected in lower aluminium price.

“The stronger US dollar against the Malaysian ringgit also works in our favour,” it said.

“We are encouraged by the demand for our value-added products (VAPs) and we are confident that we can achieve our 60% VAPs target in 2019.

“We remain optimistic in the prospects of the aluminium industry and will continue to actively seek both organic and inorganic growth opportunities to strengthen our position in the market,” it added.

Share price of Press Metal fell three sen or 0.7% to close at RM4.24, giving it a market capitalisation of RM17.06 billion.