Shaikh Daij: supporting Alba’s transformation into the world’s largest aluminium smelter

Shaikh Daij: supporting Alba’s transformation into the world’s largest aluminium smelter

Alba results impacted by LME price drop

August 2019

Aluminium Bahrain (Alba), the Bahrain-based aluminium smelter, said its top-line and bottom-line for the second quarter and first-half of 2019 were impacted by lower LME price – a drop of 21 per cent year-over-year ($1,793/t in Q2 2019 versus $2,259/t in Q2 2018).

However, this was partially offset by higher sales volumes, said a statement from Alba.

Aba reported a total comprehensive loss of BD3.3 million ($8.8 million) in the second quarter of 2019, versus a total comprehensive income of BD29.1 million ($77.4 million) for the same period in 2018, down by 112 per cent YoY. The company posted a gross profit of BD15.4 million ($40.9 million) versus BD34.3 million ($91.4 million) in Q2 2018, down by 55 per cent YoY.

With regards to total sales/revenues, Alba reported BD245.0 million ($651.8 million) in Q2 2019, up by 0.4 per cent YoY, compared to BD243.9 million ($648.9 million) in Q2 2018. Earnings per share (EPS) in this quarter were 2 fils versus 21 fils in Q2, 2018.

With regards to the first half of 2019, Alba reported a total comprehensive loss of BD19.1 million ($50.9 million), down by 130 per cent YoY, compared to a total comprehensive profit of BD62.9million ($167.4 million) in H1 2018.

The company posted a gross profit of BD16.2 million ($43.2 million) versus BD74.3 million ($197.7 million) for H1 2018, down by 78 per cent YoY. Total sales/revenues reached BD448.6 million ($1.193 billion), down by 4 per cent YoY, compared to BD465.2 million ($1.237 billion).

Earnings per share were fils (14) versus fils 44 in H1 2018.

Alba’s total assets as at June 30, 2019, stood at BD2.384 billion ($6.341 billion) versus BD2.208 billion ($5.874 billion) as at December 31, up by 8 per cent YoY.

Total shareholders’ equity as on June 30, stood at BD1.054 billion ($2.803 billion), down by 2 per cent YoY, versus BD1.073 billion ($2.855 billion) as at December 31, 2018.

Alba’s Q2 industry highlights include:

• US-China trade-tensions and geopolitical events have taken its toll on investors and added bearish dimension to the overall market sentiment. Primary demand dropped in North America and Europe due to cyclical slowdown in economic activity; stimulus measures adopted by the Chinese Government have failed to create activity in key market-sectors such as auto and construction (+1 per cent YoY) and Middle East and North Africa (Mena) consumption slowed down (+1 per cent YoY) on the back of weaker construction activities. Consumption in Saudi Arabia retreated to 1-digit growth of 5 per cent YoY with Ma’aden rolling-mill full ramp-up completion.

• Global production had a modest growth of 1 per cent YoY. Russia, India and Bahrain were the largest contributors to the world ex-China smelter production increase. On the other hand, the North America supply growth gained momentum after 2018 lacklustre (+8 per cent YoY).

• World market in deficit with China (529 Kt) & (205 Kt) without China.

• LME inventories at ~1 million metric tonne (mt) as of June-end (down by 11 per cent YoY). LME-cash averaged $1,793/t – down by 21 per cent YoY and physical premium prices remain under pressure.

• Alumina price is still relatively high – 20 per cent of LME price.

Also during Q2 of this year Alba achieved 8 million working-hours without Lost Time Injuries on July 8, 2019. The company’s production went up by 21 per cent YoY to reach 305,727 metric tonnes (mt) while sales’ volume up by 25 per cent YoY to top 311,928 mt and value-added sales averaged 52 per cent of total shipments in Q2 2019.

Shaikh Daij Bin Salman Bin Daij Al Khalifa, chairman of Alba’s board of directors, said: “Our company will soon be transformed into the world’s largest aluminium smelter with the smooth integration of Potline 6 into its existing operations in the upcoming weeks.”

“Alongside this transformation, we will also see the change of reign in the top management from Tim Murray to Ali Al Baqali who will lead Alba as the acting chief executive officer, effective August 1, as we continue to seek further efficiency and growth,” he said.

Alba’s chief executive officer Tim Murray said: “The economic uncertainty and lower LME prices have taken its toll on the aluminium industry but in our company, we have emerged stronger with progressing the ramp-up of Line 6.”

Alba’s deputy chief executive officer Ali Al Baqali added: “As we progress with Line 6 full ramp-up, we look forward to finish this year strong in our top-line and bottom-line results.”

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