lawpc128

Agreed price of aluminium is increasing but do not forget lb is a user and not a metal producer. So al price goes up lb profit will be affected

2021-06-05 08:00

milosh

yes lawpc128, im well aware of that, i talk about it little bit into details a few days ago on LBALUM forum
increasing prices are not so good for them as for miners, but still their profit margin will increase together with revenue from increased prices and more orders - prices of aluminium go up because of shortage, so we can expect orders will increase too
conclusion is, LBALUM next QR should be at least as good as previous one, i personally expect net profit to be a few % higher

2021-06-05 09:14

milosh

my understanding how it is working (note all numbers are just example):

aluminium cost per "unit" RM1000, end product sale with 10% margin RM1100
profit: RM100 per "unit" (profit margin 10%)

after aluminium price increase 50%:
aluminium cost RM1500, end product with 10% margin sell for RM1650
profit: RM150 (50% increase - the same as the profit margin is fixed)

- it means (in this example only), when aluminium price increase by 50%, company profit also increase by 50%, as the price increase is passed down to customers

- now if we consider that aluminium going up because of supply shortage and global economy recovering, we can also expect increasing sales & even higher profit margins, which in turn significantly increase company profits even more ...

2021-06-05 09:27