REG - Aluminium Bahrain - Half-year Report

Aluminium Bahrain BSCAnnouncement

13/08/2024 13:45

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RNS Number : 3012A  Aluminium Bahrain B.S.C.  13 August 2024

Media Release - Tuesday 13 August 2024

 

Alba Discloses its Financial Results for the Second Quarter and H1 of 2024

http://www.rns-pdf.londonstockexchange.com/rns/3012A_1-2024-8-13.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/3012A_1-2024-8-13.pdf)

Q2 & H1 2024 Financial Performance

Manama, Bahrain - [13 August 2024]: Aluminium Bahrain B.S.C. (Alba) (Ticker
Code: ALBH), one of the world's largest aluminium smelters, has reported a
Profit of BD68.5 million (US$182.2 million) for the second quarter of 2024, up
by 129.2% Year-over-Year (YoY), versus a Profit of BD29.9 million (US$79.5
million) for the same period in 2023. The Company reported Basic and Diluted
Earnings per Share of fils 48 for Q2 2024 versus Basic and Diluted Earnings
per Share of fils 21 in Q2 2023. The Total Comprehensive Income for Q2 2024
stood at BD66.7 million (US$177.4 million) versus Total Comprehensive Income
for the second quarter of 2023 of BD32.6 million (US$86.8 million) - up by
104.5% YoY. Gross Profit for Q2 2024 was BD102 million (US$271.2 million)
versus BD67.9 million (US$180.6 million) for the same period in 2023 - up by
50.1% YoY. With regards to the Revenue from contracts with customers in Q2
2024, Alba generated BD407 million (US$1,082.3 million) versus BD387 million
(US$1,029.4 million) in Q2 2023 - up by 5.2% YoY.

For the First Half of 2024, Alba has reported a Profit of BD93 million
(US$247.3 million), up by 20.2% YoY versus a Profit of BD77.4 million
(US$205.7 million) for the same period in 2023. The Company reported Basic and
Diluted Earnings per Share of fils 66 for H1 2024 versus Basic and Diluted
Earnings per Share of fils 55 for the same period in 2023. Alba's Total
Comprehensive Income for H1 2024 was BD94.4 million (US$251 million), up by
35.4% YoY, compared to a Total Comprehensive Income of BD69.7 million
(US$185.4 million) in H1 2023. Gross Profit for the First Half of 2024 was
BD159.2 million (US$423.5 million) versus BD147.8 million (US$393 million) in
H1 2023 - up by 7.7% YoY. Alba generated in H1 2024 Revenue from contracts
with customers of BD741.5 million (US$1,972.1 million) versus BD757 million
(US$2,013.2 million) in H1 2023 - a drop by 2% YoY.

Total Equity as of 30 June 2024 stood at BD1,861.2 million (US$4,950.1
million), up by 4%, versus BD1,789.2 million (US$4,758.6 million) as of 31
December 2023. Alba's Total Assets as of 30 June 2024 were BD2,631.1 million
(US$6,997.5 million) versus BD2,553.6 million (US$6,791.4 million) as of 31
December 2023 - up by 3%.

Alba's top-line and bottom-line were driven by LME prices which increased 11%
YoY in Q2 2024 and 1% in H1 2024. However, lower premiums, down 21% in Q2 and
32% in H1 compared to the previous year, partially offset these gains.

The Board of Directors of Aluminium Bahrain B.S.C. (Alba) resolved during the
virtual Board meeting on Tuesday 13 August 2024, to recommend the distribution
of Interim Dividend as at 30 June 2024 to the shareholders whose names are
registered on the Company's register on the Record Date. The cash interim
dividend is 18.59% of the share nominal value, equivalent to Fils 18.59 per
share amounting to BD26,320,150 (US$70 million).

 

Industry Highlights [Based on Market Intelligence]

§ Slow Demand Recovery Amidst Macroeconomic Challenges (+2% YoY)

o  The global economy continues to face several challenges including
persistent inflation, geopolitical tensions and supply chain disruptions.
These factors have collectively contributed to a passive demand environment.

o  China: Despite government stimulus efforts, Chinese consumption growth has
moderated to 3% year-over-year (YoY), indicating a lack of robust domestic
demand momentum.

o  Middle East: Supported by increased consumption in UAE, the Middle East
region has registered a modest 2% YoY demand uptick.

o  Eurozone: Economic uncertainty persists and is marked by an uneven pace of
recovery. Demand down by 4%YoY.

o  US: US services sector continues to outperform manufacturing underpinned
by healthy consumer spending. However, weak building and construction activity
has weighed on aluminium demand resulting in a 1% decline in primary demand.

 

§ Global Aluminium Production rises 3%

o  Despite overall weak demand, global primary production rose due to higher
output in China, Europe, and the Middle East.

o  Chinese supply climbed 4%YoY as Yunnan smelters operated at full capacity
except for Yunnan Hongtai smelter as heavy June rains boosted hydropower in
this province.

o  European supply edged up by only 1% YoY due to economic uncertainty.

o  Middle East supply up by 1% YoY.

o  North American supply down by 2% YoY mainly due to a 15% YoY drop in US
production.

o  As Chinese production is growing at a slower pace than consumption (China
continues to hold to its 45 million tonnes target annually), the world market
is in deficit with China (-0.40 million MT) and w/o China (-0.13 million MT).

 

§ LME Price

o  LME price averaged US$2,519/t in Q2 2024, up by 11% YoY. LME inventories
jumped 88% YoY reaching about 1 million tonnes, fuelled by growing stockpiles
of Russian metal in LME warehouses.

Alba's Operational Highlights

o  Sales' volume topped 397,538 metric tonnes (MT), up by 1% YoY while
Production dipped slightly by 0.5% YoY to reach 403,747 MT.

o  Value Added Sales accounted for 73% of the total sales' shipments [VAP:
288,312 MT in Q2'24 versus 272,944 MT in Q2'23].

o  Achieved savings for the e-Al Hassalah (the Company's improvement
programme) at US$35 million against 2024 Target of US$60 million.

o  Alba signs an agreement with SAP, a market leader in enterprise
application software, to upgrade its enterprise resource planning solution
(ERP) to SAP's latest software - S/4HANA Cloud.

o  Alba CEO takes helm of International Aluminium Institute as its Chairman.

 

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

o  Market Uncertainty Persists: Market sentiment remains cautious due to a
complex interplay of factors affecting LME prices.

o  Supply-Demand Dynamics: Increased global production, particularly from
China, combined with passive demand, is exerting downward pressure on LME
prices.

o  Economic Recovery Hope: Anticipated US interest rate cuts may stimulate
construction activity; hence, supporting aluminium demand.

o  Tight Supply Conditions: Limited new smelting projects and China's
production cap will maintain constrained supply conditions in the near term.

o  Premium Outlook: Premiums are expected to stabilise in the short term
before resuming an upward path, driven by strengthening demand from 2025 and
the implementation of the Carbon Border Adjustment Mechanism (CBAM).

o  LME Price Forecast: Aluminium prices are anticipated to trade within a
narrow range of US$2,200 to US$2,400 per tonne in the near term.

Alba Priorities: 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).

§ Capacity Expansion and Efficiency Enhancement

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

o  Complete Block 4 Project and Solar Farm (+6 MW) by Q4 2024.

o  Review Feasibility Study Class III for 'New Replacement Line'.

Commenting on the Company's performance for the second quarter of 2024, the
Chairman of Alba's Board of Directors, Khalid Al Rumaihi stated: "Building on
our Q1 performance and despite navigating a challenging market landscape
marked by depressed premiums, we are pleased to report another quarter of
solid results thanks to our dedication to operational excellence. This
performance has enabled us to return value to shareholders through an interim
cash dividend of US$70 million.

We are confident that if premiums had held steady at Q2 2023 levels, our
performance would have been even more robust. We remain optimistic about our
prospects for the remainder of 2024."

 

 

Alba's Chief Executive Officer, Ali Al Baqali, added: "The aluminium industry
continues to face economic headwinds. However, focusing on the aspects within
our control has enabled us to navigate these challenges while positioning
ourselves for sustained growth when market conditions improve.

Our recent achievement of 22 million safe working hours without a Lost Time
Injury is a testament to our team's dedication to Safety, a core value at
Alba. This Safety milestone is directly linked to our overall operational
performance and contributes significantly to our success."

Alba Management will hold a conference call on Wednesday 14 August 2024 at
2:00 PM Bahrain Time to discuss the Company's financial and operational
performance for Q2 2024 and outline its strategic priorities moving forward.

 

 

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)

 

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