Press Metal Annual Report 2023

Messages from Our Leaders Messages from Our Leaders Press Metal Aluminium Holdings Berhad 20 21 Integrated Annual Report 2023 Management Discussion and Analysis by Group CEO Management Discussion and Analysis by Group CEO Borrowings and Gearing Our total borrowings decreased by 10%, from RM5.1 billion in FYE2022 to RM4.6 billion in FYE2023. The decrease in borrowings was due to higher repayment of borrowings on the back of strong cash flow generated from our operations. As a consequence, our net gearing ratio has decreased significantly, from 0.6 times in FYE2022 to 0.4 times in FYE2023. RISK FACTORS AND RISK MANAGEMENT The performance of our business is impacted by several key market risks, including adverse changes in aluminium prices, premiums and upcharges for our VAPs. In response, we hedge a portion of our aluminium production volume for up to three (3) years, thus securing an acceptable price and minimising the impact of any industry downturns which may occur. We also undertake foreign currency hedging to reduce our exposure to fluctuations in the USD-RM exchange rate. Within the macroeconomic environment, geopolitical uncertainties and trade disputes remain prominent risks affecting global demand and commodity prices. In addition, the spectre of rising interest rates, cost inflation and the possibility of a slowing economy could potentially dampen future consumption. By expanding our profit margins through our VAPs and steering towards opportunities arising from new market dynamics, we can reduce the impact of such macroeconomic trends on our business. Lastly, sustainability-related risks are a key concern and area of focus for our business. Cognisant of the negative impact that any instance of non-compliance with environmental or social regulations can have – financially, legally and reputationally – we have integrated sustainability as a core consideration within our strategic and operational decision-making processes. TAN SRI DATO’ KOON POH KEONG Group CEO April 2024 APPRECIATION As we navigate through these unprecedented times, our resilience is thanks in no small part to the unwavering faith and support shown by our stakeholders. First and foremost, I would like to thank our Board of Directors for their wisdom, guiding us towards the best path forward during good and trying times alike. Similarly, our employees have not only displayed admirable loyalty but brought their skills and knowledge to the fore when they were needed the most. Your contributions are crucial to our shared success. I would also like to pay a special tribute to our customers, some of whom have been with us since our earliest days. Your ongoing trust and spirit of partnership are essential ingredients of our success, making us who we are today. Lastly, to our shareholders, I offer my heartiest thanks for the confidence you continue to show in us. We value your support and will continue to strive towards our goals to create sustainable value and returns for you. As we look forward to 2024 and the many possibilities that lie before us, I hope that you will share our view that our best days still lie ahead. With that, I look forward to making these avenues for advancement a reality and sharing them with you. RM1.2 billion PATAMI in FYE2023 Total dividends paid as a percentage of PATAMI 47% ESG PRIORITIES As regulatory standards and customer expectations around sustainability grow more stringent, the progress we are making across the ESG spectrum stands us in a good stead to deliver shared and lasting value for our stakeholders and our business. As outlined earlier in this statement, we have adopted a forward-thinking approach to sustainability by introducing circular economy practices, enhancing our resource efficiency and pursuing the use of renewable energy in our operations. Our sustainability performance continues to be validated by reputable local and international ratings and accreditation organisations. In October 2023, our MSCI ESG Rating was upgraded from “BBB” to “A”, certifying that we remain highly resilient against long-term, ESG-related risks. Meanwhile, our management quality score under the Transition Pathway Initiative has been graded up from Level 3 (Integrated into Operational Decision-Making) to Level 4 (Strategic Assessment), indicating a high level of readiness to undertake a low-carbon transition. These concerted efforts and consistent achievements have resulted in us maintaining our 4-star rating under the FTSE4Good Bursa Malaysia Index for the second year running. Detailed information on our sustainability approach and achievements can be found in our Sustainability Report 2023, from pages 94 to 97. TRENDS AND OUTLOOK We are adopting a cautiously optimistic outlook, conscious of the potential for a prolonged economic downturn and also the various growth opportunities that have emerged. In the short-term, we foresee a consolidation of the aluminium market at present levels, indicating that the worst may be over for the market. We also anticipate that the demand for aluminium will improve as interest rates potentially embark on a reversal course and global economies continue to recover. While the demand for aluminium awaits a rebound in the economy, its supply, previously curtailed, is expected to make an equally slow return to normal levels due to the scarcity of renewable energy for low-carbon production. Consequently, there is a possibility of a gradual improvement in aluminium prices, aligning with the potential recovery of the global economy. Looking further ahead, we are confident in the prospects of the aluminium industry. With increased capital investments in green sectors and a shift towards low-carbon content aluminium, sustainable industry players stand to benefit from an increase in demand, cushioning the reduced demand from traditional industries. Additionally, the supply chain outside of China may experience higher demand for aluminium as manufacturing operations relocate to ASEAN, thus providing new opportunities for local players to capitalise on. Through our investments in sustainable production processes and our continued pursuit of growth in the renewable energy, EV and other emerging sectors, we are positioned strongly to capitalise on the industry’s changing dynamics and to deliver longterm value and success for our business and our stakeholders.

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