Ann: 30 June 2024 Quarterly Market Update, page-7

OM Holdings sees better prospects for FY2024 on higher prices, production volume
By Syafiqah Salim & Myia S Nair / theedgemalaysia.com
01 Aug 2024, 02:55 pm


KUALA LUMPUR (Aug 1): Mining and ferroalloy smelting group OM Holdings Ltd (KL:OMH), a dual-listed company on the Australian Securities Exchange and Bursa Malaysia, is expecting better earnings this year, amid higher prices and increased production volume.
Ferrosilicon (FeSi) prices have inched upwards in recent weeks, following a Chinese customs crackdown on tax evasion, which led to temporary supply limitations. Prices closed at US$1,315 (RM6,009) per metric ton (MT) on July 24, said Adrian Low, the general manager of OMH’s wholly owned unit based in Singapore, OM Materials (S) Pte Ltd.
Adrian is the son of OMH executive chairman and chief executive officer Low Ngee Tong.
“We foresee a potential price catalyst in the medium term, due to the absence of Russian ferrosilicon (the second-largest exporter of FeSi after China) from global markets. This is particularly significant after the nationalisation of the largest producer in Russia, which further tightens global supply,” he told The Edge after OMH’s investor update on Thursday.
Meanwhile, manganese ore and alloy prices have shown signs of recovery after experiencing volatility earlier this year, Adrian said. High-grade manganese ore was priced at US$9.01 per dry metric ton unit on July 19, while silicon manganese closed at an average of US$990 per MT on July 24.
“The market is expected to normalise after the recent price spike driven by high-grade ore supply constraints, due to a suspension of exports from a key global manganese ore supplier, due to a tropical cyclone,” he said.
Overall, Adrian said OMH expects the market environment in 2024 to be more positive despite the volatility, as the group experienced excess supply and decreasing demand last year.
OMH is also looking at increased production volume, which will result in lower fixed costs, he said. The group’s total production volume for FeSi as well as manganese ore and alloys stood at 328,681 kilometric tons as of June 30.
For the full financial year ended Dec 31, 2023 (FY2023), OMH’s net profit plunged by 73% to US$18.1 million, compared with US$67.8 million in the same period a year earlier. Revenue dropped by 31% to US$589.2 million from US$856.6 million, due to lower average selling prices of ferrosilicon and silicomanganese. The gross profit margin also decreased to 16.1% from 24.2% in the previous year.
Asked about the potential impact of Sarawak’s 1.5% state sales tax on the export of ferroalloys and polysilicon, which will take effect in September, Adrian said OMH plans to pass on the costs to its customers.
“The details of the implementation will take time to finalise as the state’s requirements are still being worked out. We generally pass such costs on to our customers, and do not anticipate a significant effect on our operations or profitability,” he added.