Press Release

Padaeng profits 15.1 million Baht in first half of 2002

In its first half of the year (January-June) report to the Stock Exchange of Thailand, Padaeng Industry Public Company Limited announces a net consolidated profit of 15.1 million Baht, compared to a net profit of 402.7 million Baht during the same period last year, equivalent to a profit of 0.07 Baht per share. The inclusion of a 150.9 million Baht gain from deconsolidation of a subsidiary resulted in a higher than normal net profit for the first half of 2001.

Sales revenue for the period totaled 2,220.5 million Baht, a decrease of 487.9 million Baht or 18% from the first half of 2001. The most important factor leading to this decline in revenue continues to be the drop in world LME zinc price, caused by a still sluggish global economy and oversupply of LME zinc metal stock, US $ 788 per metric ton, a decrease of US $ 189 or 19.3%. The company’s total sales volume stood at 52,822 metric tons for the first half of 2002, a slight increase of 2.1% over the same period last year. Moreover, demand for zinc metal in the domestic market showed some improvement, while at the same time, the company pursued the development of zinc specialty alloys in an effort to meet requirements from new customers. As a result, total zinc metal production grew from 50,389 metric tons to 51,765 metric tons, up 2.7%.

Nevertheless, operating results have improved compared to Q1, 2002, during which a net loss of 5.98 million Baht was registered. Despite a lower LME zinc price, the more favorable Q2 performance is attributed to the fact that a major maintenance has been incurred in Q1.

The company’s revenue and overall profit have been affected by the low world zinc price, the drop in market premium, the appreciation of the Thai Baht and the increasing cost of raw materials caused by the closure of a number of mines. This situation is unlikely to improve during the second half of the year, and as for its main competitors, it will be an achievement for the company to minimize the loss at the end of the year.

Established in Thailand on April 10, 1981, Padaeng Industry Public Company Limited is the sole zinc smelter in Southeast Asia with annual production capacity of 100,000 metric tons.