Padaeng reports net profit of Bt 290 million for Q2/2007
Padaeng Industry Public Company Limited, the major zinc producer in Southeast Asia announced a consolidated second-quarter net profit of Bt 290 million, equivalent to earnings of Bt 1.28 per share.
In the first half of this year, the company’s consolidated net profit was Bt 603 million or earnings of Bt 2.67 per share.
As in the first quarter, the result was affected by the depressed local market, high cost of imported raw materials and a lower use of ore concentrate from the Mae Sot mine.
The total sales volumes for the first half of the year increased by 3% over the same period of 2006, driven mainly by the increased exports to South East Asia. Local demand picked up slightly from the first quarter but was still 10% lower than the same period in 2006 due to a 16% decrease in demand for pure zinc grade.
The average zinc price over the period remained high, an increase of 29% compared to the same period last year. However, the zinc price in Baht was only 17% higher due to the appreciation of the Baht against the US dollar.
As in the first quarter, the company’s operating performance was affected by low treatment charges and reduced import duty, a low premium for sales of exported metal and high raw material costs.
For the third quarter, the company does not expect that the market conditions will improve significantly. On the other hand, the coverage of the metal exposure on the LME is reducing drastically in the second half of the year, so that the company’s result is likely to derive more benefit from a high zinc price than in the first half. Also, the quality problem that restricted the use of the company?s own concentrates at the smelter in the first semester is now solved.
The company is progressing well with the renewal of its principal mining lease and is striving to meet all the legal requirements as fast as possible. The renewal procedure is a complex process and there remains a risk that the mining lease will not be granted before the current lease expires in October. The Company has no reason to expect a long delay but has nevertheless taken precautionary measures and secured the necessary stocks and supplies to meet the smelter’s production plan well into 2008.
Established on April 10, 1981, Padaeng Industry Public Company Limited is listed on the Stock Exchange of Thailand in the Resources Sector (Mining). The company is the only producer of high quality zinc in South East Asia, with an annual production capacity of 110,000 metric tons of zinc metal and alloy.