Copper prices are expected to remain volatile this year (2009), as demand for the metal slows due to the global economic downturn, leaving recent gains short-lived.
While copper wire, rod and strips manufacturer Metrod (Malaysia) Bhd could benefit from the lower prices, the weakening demand for its products domestically is likely to more than offset any improvement in margins.
Meanwhile, the company said the ongoing slowdown in economic activity was likely to have an adverse impact on the performance of the group, going forward, with the volatility of copper prices and weak domestic demand posing key risks to its business.
Metrod also has operations in Austria, and while its production facilities there were operating at full capacity last year (2008), the company had to contend with lower selling prices due to increasing competition.
Financial Results
For the third quarter ended Sept 30, 2008, Metrod recorded a 22.49% decline in net profit to RM22.49 million compared to a year earlier, while revenue slipped to RM518.24 million from RM544.97 million, due to costs associated with the setting up of its new plant in China, and the execution of new greenfield projects in India and the US that began trickling in during 4Q07.
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