MSC’s nine-month net profit up 34% to RM72.5m

KUALA LUMPUR: Tin miner and metal producer Malaysia Smelting Corp Bhd (MSC) today reported a better performance for the nine months ended Sept 30, 2022 (9M’22) on higher average tin prices and refined tin production.

Its revenue increased by 35.4% year-on-year (y-o-y) to RM1.112 billion, from RM821.5 million in the previous year’s corresponding period (9M’21). Net profit was up 34.2% to RM72.5 million from RM54 million a year earlier.

The improved performance was mainly attributable to higher average tin prices and refined tin production in the first nine months of 2022. During this time, tin prices climbed 22% to RM148,800 from RM121,500 per tonne in 9M’21.

However, in the third quarter, average tin prices fell by 26% to RM104,700 per tonne from RM141,900 per tonne in the prior year’s corresponding quarter. The decline can be attributed to a myriad of factors including concerns of a global recession which led to lower tin demand, compounded by the intermittent lockdowns in China following its zero-Covid policy. At the same time, fears of tin supply scarcity eased with the resumption of operations by smelters.

The drop in tin prices impacted the financial performance of both MSC’s smelting and mining businesses during the quarter. The group’s smelting arm posted a net loss of RM46 million in Q3’22 (Q3’FY21: net profit of RM4.9 million). Meanwhile, net profit for the mining operations fell by 72.6% to RM8 million on the back of lower tin prices and a one-off provision for legal case settlement of RM4.7 million.

As a result, MSC recorded a net loss of RM31.3 million in Q3’22, exacerbated by longer-than-expected furnace outage due to logistic delay to secure specialized fire rated bricks and higher operating costs in relation to energy, fuel, reductant and furnace re-bricking costs during the quarter. Group revenue stood at RM344.1 million in Q3’22.

“The decline in tin prices and higher-than-expected inflation have impacted MSC’s performance in Q3FY22. Our operational costs have risen as we recorded higher energy and freight prices due to the prolonged Russia-Ukraine war,” said MSC group CEO Datuk Patrick Yong.

He said MSC will continue to remain vigilant while focusing on efforts to strengthen the group’s operational efficiencies.

Yong said MSC looks forward to higher production yield and efficiency at the Pulau Indah smelting facility using the more efficient top submerged lance furnace technology. MSC expects to generate cost-savings of about 30% with lower manpower and carbon emissions.