TAK : The SET-listed Padaeng Industry Plc (PDI), Southeast Asia's sole zinc smelter, says its financial performance has remained weak in the second quarter, as zinc prices are unprofitable.
Zinc die-casting alloys are stacked in Padaeng Industry’s zinc smeltering factory in Tak’s Mae Sot district. PATHOM SANGWONGWANICH
Managing director Francis Vanbellen said the company's first-quarter net profit was generated mainly from hedging on zinc prices at US$2,141 a tonne. Baht appreciation against the US dollar reduced the zinc price in local currency by 4%.
PDI posted a first-quarter net profit of 34.3 million baht compared with a net loss of 47 million in the same period last year.
The hedging strategy was pursued because the current zinc price of $1,850 a tonne will incur losses, said Mr Vanbellen, adding that PDI has reduced output to 82,500 from 110,000 tonnes to cut costs.
He said with a 75-80% share of the domestic zinc market, the company plans to extract more domestic ores since it imports these raw materials from Australia and South America.
The company is looking to acquire ores from Turkey, given that they have similar qualities as Thai ores from Mae Sot district, said Mr Vanbellen.
Chitchai Thaveepanich, the vice-president for human resources and corporate administration, said PDI has focused on the domestic market for zinc galvanised steel products, while premium alloy products are exported to neighbouring countries, particularly Indonesia, Malaysia and Vietnam.
For the upcoming Asean Economic Community, Mr Chitchai said PDI may diversify its second-priority investment plan to Indonesia and Myanmar.
Shares of PDI closed on the SET Friday at 11.30 baht, down 20 satang, in trade worth 1.52 million baht.
About the author
- Writer: Pathom Sangwongwanich
Position: Business Reporter