PMBTech Q3 net profit dives to RM1.64 million

KUCHING: The lower selling price of silicon metal, coupled with higher operating costs, have significantly eroded the earnings of PMB Technology Bhd (PMBTech) this year.

In third quarter to Sept 30, 2023 (3Q2023), PMBTech saw its group net profit plunged to RM1.64 million from about RM17 million in 3Q2022 as revenue fell to RM296.7 million from RM312.8 million.

This impacted earnings per share which declined to 0.12 sen from 1.49 sen. PMBTech said the five per cent fall in group revenue in the current quarter under review as compared to a year ago was due to lower turnover reported by both the manufacturing & trading segment and construction & fabrication segment.

The manufacturing & trading segment is involved in the manufacture of metallic silicon, aluminium access equipment, marketing and trading of other related products. The construction & fabrication segment is engaged in contracting, designing and fabrication of aluminium curtain wall, cladding system and system framework.

PMBTech owns and operates metallic silicon manufacturing plants in Samalaju Industrial Park, Bintulu, and the company is an associate of Press Metal Aluminium Holdings Bhd, the largest integrated aluminium smelter in Southeast Asia.

In 3Q2023, the construction & fabrication segment reported a three per cent decline in revenue to RM200.4 million (3Q2022: RM207.4 million) mainly due to lower selling price of the silicon metal despite higher quantity sold.

“Lower selling price coupled with higher operating costs caused the segment profit to decrease from RM22 million to RM6.7 million in current quarter,” PMBTech said in its financial results.

The construction & fabrication  segment’s revenue decreased by nine per cent to RM96.3 million (RM105.4 million) due to slower progress of certain on-going projects.

This adversely affected its profit which fell to RM3 million (RM4.8 million). As compared to the immediate preceding quarter (2Q2023), PMBTech delivered improved financial results in the current quarter. In 3Q2023, group revenue rose by 33 per cent to RM296.7 million (2Q2023: RM223.9 million) due to higher contributions from both business segments.

In line with higher revenue after offsetting higher foreign exchange loss recorded in 3Q2023, the pretax profit climbed by 13 per cent to RM4.3 million from RM3.8 million in 2Q2023. On a nine-month 2023 period (9M2023), PMBTech reported dismal performance, with group net profit nose-diving to about RM13.5 million (9M2022: RM101.2 million) as revenue slumped to RM795.5 million (RM875 million). The manufacturing & trading segment reported a 15 per cent drop in group revenue in 9M2023 due mainly to lower selling price of the metallic silicon, coupled with higher operating costs.

This resulted in the segment profit dropped by a hefty RM104.6 million to RM32.5 million (RM137.1 million).

The construction & fabrication segment, however, recorded a six per cent increase in revenue to RM261.2 million (RM247 million) but its operating profit fell by 13 per cent to RM7.5 million (RM8.6 million) due to higher operating expenses.

Commenting on the current year’s prospects, PMBTech said the growth in advanced economies is expected to slow down in view of the still-elevated inflation and interest rates while the growth in developing economies will remain stable, driven by accelerating domestic activity and strengthened resilience.

“Market conditions for the silicon metal industry improved slightly in 3Q2023, particularly in Asia where prices rose during the quarter.

Demand from the automotive sector showed signs of recovery while demand from the polysilicon sector remained strong.

“The silicones sector remains oversupplied and is yet to show signs of recovery due to weak demand, especially in the Chinese market that is impacted by the on-going slump in property and construction activity.” According to PMBTech, near term challenges remain for the industry as the current weak global macro-economic environment is expected to weigh on demand.

However, in spite of the newterm headwinds, the company said there are reasons for an optimistic longer-term outlook for the industry as the resiliency of the global trends supporting the sustainable growth in demand fort silicon metal is increasingly becoming evident.

Silicon metal is used to manufacture steel, solar cells and microchips. “Global light vehicle sales are expected to rebound in 2023, albeit from a low base, with sales growing by approximately 8% over last year.

The European and US markets are expected to achieve doubledigit growth for the year.

The global EV (electric vehicle) market posted a 34% growth in the first nine months of the year, with the share of EVs in total new car sales continuing to expand in all three key auto markets.

“As solar module prices continued to decline in 3Q2023, hitting an all-time low in August, the global solar market hit record higher in installations. An updated forecast as at 3Q2023 shows that solar installations for the year will rise by more than 50% over last year at 392GW. Although China continues to lead the way, a rapid build-up in other established markets have also been observed,” said PMBTech.