Press Release

First Quarter Financial Results of Padaeng Industry

Padaeng Industry Public Company Limited reported a net profit of 21.4 million baht for the first quarter.

Mr. Brett Lambert, President and CEO of Padaeng Industry Public Company Limited, reported that the company’s operating results for the first quarter of 1999 showed a net profit of 21.4 million baht.The result was assisted by a 7.2% increase in production of saleable zinc from Padaeng’s Tak refinery and a reduction in unit production costs of 16.4% compared to the first quarter of 1998. However an extraordinary exchange rate loss of 28.7 million baht and a relatively low zinc price had a negative impact. During the quarter cashflow from operations was used to repay 135 million baht of long term debt which has reduced future interest charges.

The 1999 March quarter profit was considerably lower than the 643 million baht reported for the same period last year because the 1998 result was abnormally affected by the clearance of 8,000 tonnes of zinc left unsold at the end of 1997, a 283 million baht exchange rate gain and a far more favorable exchange rate than that prevailing in 1999.

Mr Lambert pointed out that because of these factors, a direct comparison of the profit achieved in the first quarter of each year gave a misleading impression. The higher production level, lower costs and stronger domestic sales achieved in first quarter 1999 demonstrate a fundamental improvement in Padaeng’s business performance over the last 12 months.

Regarding the world zinc situation, Mr. Lambert mentioned that market fundamentals for zinc were favorable, supporting a widely held view that prices are likely to trend upwards. At the moment, the average price is over US$1,060 per tonne, a considerable improvement on the first quarter average of US$993 International commodities analysts are forecasting continued growth in zinc consumption and significant increases in regional demand are expected as Southeast Asian countries recover from the economic crisis.