MANAGEMENT DISCUSSION & ANALYSIS BY GROUP CEO Cont’d STRATEGIC FOCUS AREAS As we move into 2023, Press Metal is laser-focused on operational improvements to pursue our strategic growth agenda. The vulnerabilities in global supply chains were revealed by the pandemic and further amplified by the Russian-Ukraine tensions. The long-term supply and access to our key raw materials will provide us with a strategic advantage and is paramount to sustainable operations. We will continue strengthening our supply chain to minimise risks of disruptions and maintain business continuity. With our larger smelting capacity, we will have room to enhance our value-added segment which provides better margins. Moving forward, we will be expanding our market presence on value-added products to enhance growth and margins over the mid to long term. We will also look towards increasing our extrusion portfolio to support the renewable energy and consumer-related sectors. Last but not least, pursuing growth helps us to become the best version of ourselves. Press Metal will continue to embed a growth mindset and looking at various opportunities to expand its business and increase its revenue. Our success as a company is not only dependent on our internal capabilities but also on the strength of our relationships with our strategic partners. On the external front, besides already having Sumitomo Corporation as an equity stakeholder of our smelters, we have made a significant development in our partnership with Glencore by inking a 10-year alumina supply and aluminium offtake agreement. We are delighted that Glencore recognises our efforts in sustainable and responsible production of low carbon aluminium. Glencore, as one of the largest globally diversified natural resources companies, will be another prominent platform for us to raise our profile in markets such as America and Europe, and to penetrate some of the global green brands. As we share identical philosophies in supporting a low carbon economy and climate commitment, we will leverage on this strategic partnership to identify investment opportunities within our value chain. TRENDS & OUTLOOK Amid all the unprecedented global events and uncertainties over the last few years, there was an overarching and unwavering theme - higher climate ambitions and greater attention towards sustainability. We are now seeing this progressively being ingrained into policies and regulations globally. Consumers and companies are more likely to purchase ethically-sourced and sustainable products, while actively avoiding companies that score poorly or are perceived as having negative environmental impacts. In this regard, sustainability frontrunners will be valued and preferred. We are well-poised in this area and are committed to contributing to a better world. Press Metal will continue strengthening our position in low-carbon aluminium which has seen accelerating demand during this green transition towards a low-carbon economy. As for the current year’s demand, we remain cautious and vigilant in monitoring the world development. Although global economy remains uninspired, the fear of an earlier predicted deep recession in Europe has eased somewhat, and China’s re-opening has boosted optimism on recovery which may push primary demand higher. The relatively low world inventory of aluminium and a resurgence of activities from China could potentially underpin a stronger aluminium price performance. The structural changes brought about by the curtailment of smelters in the west and also the consequences of the Russian-Ukraine tensions have opened up an opportunity for us to strengthen our position further in the western market. Despite short-term market volatilities, longer-term fundamentals for the aluminium industry remain positive, supported by global decarbonisation drive and green initiatives. ANNUAL REPORT 2022 20
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