KUCHING: OM Holdings Ltd’s group after-tax profit has shot up to US$60 million (RM268.9 million) in first half-year ended June 30, 2022 (1H2022) from US$18.1 million (RM81.1 million) in 1H2021, boosted by the higher prices of ferro silicon (FeSi), silico manganese alloys and manganese ores.
Revenue from operating activities climbed by 35 per cent to US$466.7 million from US$345.9 million during the same period as a result of the higher average selling prices for FeSi, silico manganese (SiMn) and manganese ores despite lower total product volumes traded in1H2022.
Gross profit margin increased to 27.7 per cent in 1H2022 from 19.0 per cent in H12021 predominantly attributed to higher transacted prices of manganese ores and ferro alloys in H12022, OMH said in releasing its latest financials recently.
“For 1H2022, OMH said FeSi price increased from US$2,110 per metric tonne CIF Japan at the end of December 2021 to close at US$2,225 per metric tonne CIF Japan at the end of March 2022, before closing at US$1,925 per metric tonne CIF Japan at the end of June 2022.
“SiMn price followed the same trajectory as FeSi, which increased from US$1,535 per metric tonne CIF Japan at end of December 2021 to US$1,775 per metric tonne CIF Japan at the end of March 2022.before closing at US$1,225 per metric tonne CIF Japan at the end of June 2022,” added the company.
OMH attributed the increase in FeSi and SiMn prices in 1Q2022 mainly to the Russian-Ukraine war as the two countries were the second largest exporting countries of FeSi and manganese alloys respectively in FY2021.
It said the Russia-Ukraine conflict has created uncertainty in the global supply of ferro alloys which has also contributed to the support of the prices.
“However, ferro alloy prices reduced in 2Q2022 mainly due to reduced demand from steel mills amid higher energy costs and a weaker global steel market,” it added.
Reviewing the performance of OM Materials (Sarawak) Sdn Bhd’s (OM Sarawak) ferro alloy smelting plant in Samajaya Industrial Park, Bintulu, OMH said as at 1H2022,the plant was still operating 12 out of the 16 furnaces.
“The group’s FeSi volume traded increased by 17 per cent in 1H2022 mainly due to pent up global demand as well as higher stock balances at the end of FY2021. Revenue contribution from FeSi increased significantly to US$182.7 million (1H2021:US$79.7 million) as average transacted prices for FeSi doubled for 1H2022 as compared to the same corresponding period in 2021.
“Revenue contribution from manganese alloys (mainly SiMn) increased to US$201.1 million (1H2021:US$146.0 million) as average transacted prices increased by approximately 55 per cent despite approximately 11 per cent lower manganese alloys volumes traded in 1H2022,” added OMH.
The company said total manganese ore volumes traded (including from the group’s wholly-owned Bootu Creek Manganese mine which entered a care and maintenance phase in January 2022 and other third party ores) fell 39 per cent in 1H2022.
As a result, despite the increase in average selling prices, total revenue contribution from manganese ore dropped 30 per cent to US$80.4 million (1H2021:US$115.2 million in 1H2021).
Fastmarkets MB reported that the price of 44 per cent Mn ore increased from US$5.60/dmtu CIF China at the end of December 2021 to US$7.80/dmtu at the end of March 2022 before softening to close at US$7.27/dmtu at the end of June 2022.
OMH said its total borrowings decreased to US$261.7 million as at June 30, 2022 from US$296.8 million as at December 31, 2021.
The reduction in borrowings included repayments against the Sarawak Project finance loans of approximately US$12.9 million in 1H2022, and lower utilisation of trade financing facilities as at June 302022.
As a result, total borrowings to equity ratio decreased from 0.67 times to 0.54 times during the same period.
OMH executive chairman and CEO Low Ngee Tong said OM Sarawak has delivered an outstanding set of results for 1H2022.
“Despite pandemic related workforce challenges and the fluid working environment in a year of furnace conversion and major maintenance, we have delivered operationally and the group has been able to post very robust financial results.”
He said OM Sarawak has been undertaking major maintenance works since June 2022 but is on track to achieve production of 340,000 to 360,000 tonnes of ferro alloys by end-2022.
“Meanwhile, we remained focused on our Environmental, Social and Governance (ESG) commitments and are on track to achieve the key targets set out in our sustainability statement. We are entering a very exciting phase with major growth projects on hand, and the completion of full ownership of the Sarawak smelting operations is currently underway despite the challenging marco-environment,” he added.
OMH group, which now owns 75 per cent equity interest in OM Sarawak, is acquiring the remaining 25 per cent stake from Cahya Mata Sarawak Bhd (CMS) group.