REG - Aluminium Bahrain - 1st Quarter Results

Aluminium Bahrain BSCAnnouncement

14/05/2024 14:15

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240514:nRSN4028Oa&default-theme=true

RNS Number : 4028O  Aluminium Bahrain B.S.C.  14 May 2024

Media Release - Tuesday 14 May 2024

 

Alba Discloses its Financial Results for the First Quarter of 2024

http://www.rns-pdf.londonstockexchange.com/rns/4028O_1-2024-5-14.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/4028O_1-2024-5-14.pdf)

Q1 2024 Financial Performance

Aluminium Bahrain B.S.C. (Alba) (Ticker Code: ALBH), one of the world's
largest aluminium smelters, has reported a Profit of BD24.5 million (US$65
million) for the first quarter of 2024, a drop of 48% Year-over-Year (YoY),
versus a Profit of BD47.5 million (US$126.2 million) for the same period in
2023. The Company reported Basic and Diluted Earnings Per Share of fils 17 for
Q1 2024 versus fils 34 for the same period in 2023.

Total Comprehensive Income for Q1 2024 stood at BD27.7 million (US$73.6
million) versus BD37.1 million (US$98.7 million) for the same period in 2023 -
a drop of 25% YoY. Gross Profit for Q1 2024 was BD57.3 million (US$152.3
million) versus BD 79.9 million (US$212.4 million) for the same period in 2023
- down by 28% YoY.

With regards to the Revenue from contracts with customers in Q1 2024, Alba
generated BD334.6 million (US$889.8 million) versus BD369.9 million (US$983.8
million) in Q1 2023 - a drop of 10% YoY.

Total Equity as of 31 March 2024 stood at BD1,794.9 million (US$4,773.6
million), up by 0.3%, versus BD1,789.2 million (US$4,758.6 million), as of 31
December 2023. Alba's Total Assets as of 31 March 2024 were BD2,575.5 million
(US$6,849.6 million) versus BD2,553.6 million (US$6,791.4 million) as of 31
December 2023 - up by 0.9%.

Alba's top-line and bottom-line were driven by lower LME prices (down by 8%
YoY in Q1 2024) and lower premiums (down by 27% YoY in Q1 2024).

 

 

 

Industry Highlights [Based on Market Intelligence]

§ Global Economy Bounces Back, Market Demand (+5% YoY)

o  The global economy is holding up better than expected, even with rising
interest rates. Industrial production is poised for a comeback with key
indicators pointing towards a positive outlook. While inflation is on a
downward trend, progress is slower than anticipated due to persistent energy
price risks and volatile shipping costs.

o  China leads demand growth fuelled by robust growth in renewables and
electric vehicle (EV) sectors. Chinese aluminium consumption surged by 9%
year-over-year (YoY).

o  Middle East region boasts a positive picture with demand climbing 7% YoY
driven by higher consumption in the UAE (14% YoY) and KSA (8% YoY).

o  The eurozone presents a stark contrast. Its economy stagnated in Q4 2023
and continues to struggle in Q1 2024 - this was reflected in a 2% YoY drop in
demand.

o  Sluggish consumption in the US persists due to inflationary pressures,
down by 2% YoY.

 

§ Global Aluminium Supply (+3% YoY), Mixed Signals Amid Geopolitical Tensions

o  China's production growth muted by hydropower shortage. Despite the
restart of Yunnan smelters, Chinese aluminium supply climbed by 4% YoY.

o  Middle East witnessed a rise in supply, +4% YoY, bolstered by a 29% surge
from Saudi Arabia.

o  European production edged up by 2% YoY, largely fuelled by increased
output from Russian smelters.

o  North America experienced a modest 1% YoY rise, primarily due to a 5% YoY
increase from Canadian smelters, partially offset by the closure of the New
Madrid smelter in the US (-13% YoY).

o  The global market currently sits in surplus of 47kMT including China and
deficit of 218kMT ex-China. This dynamic is further complicated by recent
sanctions imposed by the US and UK on Russia. [These sanctions include an
import ban on Russian aluminium and restrictions on activity at LME, where a
significant portion of Russian aluminium is stored (with LME stocks of Russian
origin reaching 91% of the total].

§ LME Price & Premiums

o  Market uncertainty surrounding inflation and policy support measures
pushed LME prices down to US$2,200/t in Q1 2024, representing a drop of 8%
YoY. Prices fluctuated between US$2,110/t (lowest on 22 Jan'2024) and
US$2,337/t (highest on 02 Jan'2024).

o  LME inventories remain at low levels at ~0.5 million MT (up by 5% YoY).

o  Premium prices diverge regionally: DDP Rotterdam premiums up while MJP
& US Midwest dip. [The recent Baltimore bridge collapse is expected to
elevate US Midwest premiums in the short term].

Alba Celebrates ESG Achievements and Plans Future Course

§ Safety First. Safety Always

o  Launch of plant-wide 'SAFE and Healthy Ramadan' Campaign.

§ Empowering People

o  Nine employees earned Professional Diploma in Waste Management from
Arabian Gulf University (AGU).

o  12 exceptional employees, including 6 women, were recognized with the
'Inspirational Employee of the Year' Award.

§ Leading the Way, Sustainable Aluminium Production

o  Inked an Associate Centre Partnership Agreement under the Advanced
Manufacturing Industries Cluster with the World Economic Forum (WEF),
cementing Alba's position as a leader in sustainable and innovative
manufacturing.

o  Installing Solar Photovoltaic (PV) Power Generation System is underway
across various locations within Alba.

§ 2024 Objectives

o  Safety Mirror: Continuous improvement in safety practices; Strategy
Refresh: Strategy makeover; e-Al Hassalah: Embrace digital technologies to
unlock further efficiencies; Upskilling & Reskilling: Empower human
capital through targeted training programmes.

§ Building for Tomorrow

o  Power Station 5 Block 4 Project is on track for completion in Q4 2024.

Alba's Operational Highlights

§ Sales volume topped 363,283 MT, up by 1% YoY, while Production rose to
405,893 MT, reflecting a 2% YoY growth.

§ Value Added Sales (VAP) averaged 70% of total shipments, corresponding to
+10% YoY [VAP: 252,772 MT in Q1'24 versus 230,491 MT in Q1'23].

§ Alba secured a strategic 10-Year Gas Supply Deal with Bapco Energies,
featuring a fixed price structure for the initial five years at a competitive
US$4 per million British thermal units (MMBTU).

§ Alba and EGA signed a comprehensive Technology Service Agreement for
Reduction Line 6 which includes technical support services, monitoring
services as well as operational consultation.

§ Achieved savings for e-Al Hassalah at US$29 million against 2024 Target of
US$60 million.

 

§ Aluminium Market Outlook: Uncertainties Cloud Short-Term Prospects [Based
on Market Intelligence]

o  Macroeconomic Headwinds: Concerns over persistent inflation and the
effectiveness of government support measures continue to cast a shadow on the
aluminium market. Strong dollar may limit LME price increases.

o  Demand, A Delicate Balance: Despite initial restocking activities,
consumer confidence in near-term interest rate cuts is waning. This could lead
to a renewed drop in demand, potentially offsetting the recent improvement.
The automotive sector remains the primary driver, although overall demand is
expected to remain modest in Q2 2024.

o  Geopolitical Tensions and Freight Rate Fluctuations: While disruptions
persist in the Red Sea, freight rate stabilization has shifted the focus back
to demand. Geopolitical tensions remain a significant unknown factor that
could influence market dynamics.

o  LME Price Forecast: LME prices are expected to range between US$2,250/t
and US$2,350/t in the near term.

Alba: Safe, Sustainable, Successful

§ Leading the Way: Safety First, Sustainability Always

o  Aligned with Bahrain's objective of net-zero emissions by 2060, Alba
embeds sustainability principles in all operations, minimizing environmental
impact from raw material sourcing to product delivery.

§ Operational Excellence and Growth

o  Exceed 2023 Net Finished Production of 1,620,665 MT and achieve e-Al
Hassalah 2024 Target of US$60 million (versus 2026 Target of US$150 million).

o  Maintain active pursuit to source upstream resources to meet one-third of
its alumina needs.

§ Capacity Expansion and Efficiency Enhancement

o  Leverage its industry-leading certifications such as Aluminium Stewardship
Initiative (ASI) and Ecovadis to penetrate new markets and drive growth in
Value Added Sales (VAP).

o  Complete Block 4 Project by Q4 2024 and Solar Farm by Q2 2024.

o  Review Feasibility Study Class III for 'New Replacement Line' (previously
Line 7).

Commenting on the Company's performance for the first quarter of 2024, the
Chairman of Alba's Board of Directors, Khalid Al Rumaihi stated:

"Despite market headwinds and lower LME prices, our commitment to operational
excellence yielded good results in Q1 2024. In fact, if commodity prices (LME
and premium prices) had remained at Q1 2023 levels, we are confident we would
have delivered an even stronger performance for this quarter.

Such performance positions us as a frontrunner to capitalize on the upswing in
LME prices driven by global aluminium demand boom. Furthermore, our focus to
strategic priorities equips us to navigate 2024 with agility, capitalizing on
emerging opportunities."

Alba's Chief Executive Officer, Ali Al Baqali, added: "While the overall
economic climate remains challenging, we are laser-focused on the controllable
aspects of our business: Safety, streamlined operations, and a rigorously
cost-effective structure. This focus, coupled with the dedication of our
entire team, empowers us to thrive even in these challenging economic
conditions."

Alba Management will hold a conference call on Wednesday 15 May 2024 at 2:15
PM Bahrain Time to discuss the Company's financial and operational performance
for Q1 2024 and outline its strategic priorities moving forward.

ENDS

About Aluminium Bahrain B.S.C. (Alba)

[Ticker: ALBH]

A Global Aluminium Leader: At plus-1.62 million metric tonnes per annum (mtpa)
(2023), Alba is a world-leading aluminium smelter with a proud 50-year legacy
in operational excellence, safety, environmental responsibility, and community
development.

 

Trusted Partner: A cornerstone of the Bahrain's economy, Alba produces
high-quality aluminium, including standard and value-added products, which are
exported to over 270 customers globally. With sales' offices in Europe
(Zurich), Asia (Singapore), and a subsidiary in the U.S., Alba is a reliable
partner on the world stage. Alba is dually listed on Bahrain Bourse and London
Stock Exchange and its shareholders are Bahrain Mumtalakat Holding Company
B.S.C. © (69.38%), SABIC Industrial Investments Company (SIIC) (20.62%) and
General Public (10%). Alba prioritizes the highest quality standards,
reflected in its certifications: ISO 9001 (quality), ISO 14001 (environment),
ISO 27001 (information security), ISO 45001 (occupational health and safety),
and ISO 18788 (security operations management). Additionally, Alba
demonstrates its commitment to responsible manufacturing through
certifications like IATF 16949 (automotive quality), ISO 22301 (business
continuity), and ASI Performance and Chain of Custody Standards. This
dedication is further underscored by their top 1% Ecovadis Platinum rating for
sustainability.

 

Pioneering Sustainability: As the first aluminium smelter in the Middle East,
Alba is central to Bahrain's thriving downstream aluminium sector,
contributing significantly to the Kingdom's GDP. Committed to social
responsibility, Alba employs a workforce that is 86% Bahrainis (2023) and
invests heavily in employee training and development. Alba also plays a
crucial role in the Aluminium Downstream Park, therefore increasing the
contribution of non-oil sectors to the GDP of Bahrain. Alba has been
recognised for its initiatives to produce Aluminium responsibly through awards
such as Top ESG performer in Bahrain by ESG Invest, Safeguard Label from
Bureau Veritas and Best Corporate Governance Award by Ethical Boardroom.

 

Recognised for its environmental practices, social contributions, and
corporate governance, Alba launched a comprehensive ESG Roadmap in 2022
focusing on 6 priority areas: (1) Decarbonisation, (2) Green Energy &
Aluminium, (3) Circular Economy & Secondary Aluminium, (4) Employee
Welfare, (5) Collaboration & Partnership and (6) Transparency,
Communications & Due Diligence. Since its inception, Alba has invested
into numerous environment, sustainable and socio-economic development projects
that have had a positive impact on the society. Alba's first-of-its-kind
US$37.5 million zero-waste Spent Pot Lining Treatment Plant, the upcoming +6
MW Solar Farm Project and the Power Station 5 Block 4 Project are tangible
initiatives aligned with Bahrain's Net Zero Carbon Targets by 2060 led by HRH
the Crown Prince and Prime Minister of Bahrain.

 

In a significant step towards its ESG goals, particularly its commitment to a
circular economy and secondary aluminium, Alba introduced EternAl, its new
line of low-carbon aluminium products. Launched in May 2024, EternAl offers
two initial variants: EternAl-30 and EternAl-15, containing 30% and 15%
recycled content respectively.

 

Safety First, Always: Guided by the motto "Safety First, Safety Always," Alba
prioritises the well-being of its employees and contractors. The Company
achieved a record-breaking 30 million safe working hours without a lost-time
injury in September 2022. The Company has been recognised internationally for
its excellent Safety and Health track record with awards such as the RoSPA
President's Award for winning RoSPA Gold Medal Award 10 years in a row, the
British Safety Council's International Safety Award with Merit along with
4-Star Audit Rating, as well as numerous awards from the National Safety
Council (NSC).

 

Alba Power Station 5 (PS5) Block 4 Expansion Project

 

Alba's PS5 Block 4 is a new 680.9-megawatt (MW) combined-cycle power plant
that expands the existing PS5 facility. This state-of-the-art J-class gas
turbine addition boasts superior efficiency compared to Power Stations 3 &
4. Scheduled for completion in Q4 2024, Block 4 will boost PS5's total
capacity to 2,481 MW, while reducing greenhouse gas emissions by 0.5 tonnes of
CO(2) per tonne of aluminium produced.

A consortium of Mitsubishi Power and SEPCOIII is responsible for the entire
project lifecycle, from design and engineering to construction and
commissioning. Alba has achieved in April 2024 the first fire of the
state-of-the-art GT for Block 4 Project.

Alba Stakeholder Engagement Plan

Alba prioritises open communication with all its stakeholders, including the
community, environmental and social groups. Through its Stakeholder Engagement
Plan, the Company proactively addresses environmental and social impacts of
its operations, outlining clear mitigation controls. Alba also maintains an
external Grievance Mechanism accessible through the Code of Conduct, allowing
stakeholders and the public to voice concerns and raise issues.

Scan the above to Alba's Stakeholder Engagement Plan

Alba's External Grievance Mechanism

Alba prioritises ethical conduct and environmental responsibility.
Stakeholders, employees, contractors, and the community can confidentially
report any potential breaches of Alba's Code of Conduct or raise concerns
about environmental and social impacts through the Alba Integrity Line
(https://www.albasmelter.com/en/category/code-of-conduct) . This independent,
multilingual hotline operates 24/7 and is accessible via a toll-free phone
number, the company intranet, or the website at www.albasmelter.com
(https://www.albasmelter.com) .

Scan the above to Alba's Code of Conduct
 

For further details, please contact:

Eline Hilal

Director, Investor Relations, Insurance & Corporate Secretary

Investor Relations Department

Tel:         (973) 1783 5100

E-mail:    eline.hilal@alba.com.bh (mailto:eline.hilal@alba.com.bh)

Website: www.albasmelter.com (https://www.albasmelter.com)

 

Follow us on:

www.twitter.com/Alba4World (https://www.twitter.com/Alba4World)

www.facebook.com/Alba4World (https://www.facebook.com/Alba4World)

www.instagram.com/Alba4World (https://www.instagram.com/Alba4World)

www.linkedin.com/company/aluminium-bahrain
(https://www.linkedin.com/company/aluminium-bahrain)

www.youtube.com/Alba4World (https://www.youtube.com/Alba4World)

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  QRFBXGDUGGBDGSS