REG - Aluminium Bahrain - Annual Financial Report

Aluminium Bahrain BSCAnnouncement

14/02/2024 16:45

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RNS Number : 1768D  Aluminium Bahrain B.S.C.  14 February 2024

Media Release - Wednesday 14 February 2024

MANAMA (ALBH)

 

Alba Reports its Financial Results for the Fourth Quarter and 12 Months of
2023

 

Aluminium Bahrain B.S.C. (Alba) (Ticker Code: ALBH), one of the world's
largest aluminium smelters, has reported a Profit of BD23.4 million (US$62.2
million) for the fourth quarter of 2023, down by 40.7% Year-over-Year (YoY)
versus a Profit of BD39.4 million (US$104.9 million) for the same period in
2022. The Company reported Basic and Diluted Earnings per Share of Fils 17for
Q4 2023 versus Basic and Diluted Earnings per Share of Fils 28 for the same
period in 2022. The Total Comprehensive Income for Q4 2023 stood at BD6.2
million (US$16.5 million) versus a Total Comprehensive Income for Q4 of 2022
of BD24.4 million (US$64.7 million) - down by 74.6% YoY.

 

For the Full-Year of 2023, Alba has reported a Profit of BD118 million
(US$313.9 million), down by 71.6% YoY, versus a Profit of BD416.2 million
(US$1,106.8 million) for 2022. Alba reported Basic and Diluted Earnings per
Share of fils 83 versus Basic and Diluted Earnings per Share of fils 294 in
2022. Alba's Total Comprehensive Income for the year of 2023 was BD106.7
million (US$283.8 million), a drop of 75.8% YoY, compared to a Total
Comprehensive Income of BD440.4 million (US$1,171.4 million) for 2022.

 

Total Equity as of 31 December 2023 stood at BD1,789.2 million (US$4,758.6
million), down by 1.8% YoY, versus BD1,822.5 million (US$4,847 million) as of
31 December 2022. Alba's Total Assets as of 31 December 2023 were BD2,553.6
million (US$6,791.4 million) versus BD2,617.2 million (US$6,960.6 million) as
of 31 December 2022 - a drop of 2.4%.

 

Alba's top-line and bottom-line were driven by lower LME prices (down by 5.8%
YoY in Q4 2023 and down by 16.8% YoY for the 12 months of 2023) and lower
premiums (down by 34.1% YoY in Q4 2023 and down by 35.3% YoY for the 12 months
of 2023).

 

The Board of Directors of Aluminium Bahrain B.S.C. (Alba) resolved during the
Board meeting on Wednesday 14 February 2024, to recommend the distribution of
cash dividend for the year ended 31 December 2023 to the shareholders whose
names are registered on the Company's register on the Record Date. The Cash
Dividend will be subject to the approval of the Company's shareholders at the
upcoming Annual General Meeting on 07 March 2024. Cash Dividend: 29.18% of
share nominal value, equivalent to Fils 29.18 per share amounting to
BD41,314,159 (the proposed annual cash dividend includes the Interim Dividend
of Fils 13.28 per share which was already distributed to the shareholders by
31 August 2023).

 

Industry Highlights

World Market Demand (+1% YoY)

§ Aluminium consumption saw a modest growth globally due to stagnant
economies curbed by rising interest rates and inflation, ongoing supply chain
disruptions and weak consumer confidence.

§ Chinese economy showed signs of stability fueled by resilient manufacturing
sector and a rebound in auto sector and consumer goods spending (+ 5% YoY).

§ KSA's aluminium consumption plunged by 6% YoY, dragging down the demand in
Middle East by 7% YoY.

§ US economy is transitioning to a slower pace with labor market easing and
consumers facing increased cost pressure due to higher interest rates all of
which led to a drop of 6% YoY in aluminium demand.

§ Europe: sluggish economy caused by tighter controls on spending, rising
prices (high inflation) and weaker consumer interest have led to a contraction
in aluminium consumption (-8% YoY).

 

World Market Supply (+2% YoY)

§ China: growth in production slowed due to winter disruptions in the South
(+3% YoY).

§ North America: production rose by 3% YoY with smelters' restarts.

§ Middle East: overall flat (+1% YoY) with gains in Bahrain & UAE (+1%
YoY) offset by a decline in KSA              (-6% YoY).

§ Europe: primary production cut back (-4% YoY) due to weak manufacturing
activity.

§ Russia: LME stocks of Russian origin surged to reach 90% of total LME
stocks. UK imposed additional sanctions on Russian metal.

§ World market w/o China posts first surplus since 2020 (+51,000 MT) & in
deficit with China (-6,000 MT).

 

LME Price & Premiums

§ LME Cash averaged US$2,252/t in 2023 - down by 17% YoY. LME price
fluctuated in the fourth quarter between a low of US$2,082.50/t on 11 December
and a high of US$2,335.50/t on 29 December.

§ LME inventories remained low at 566,000 MT by year-end despite a 27%
increase YoY. Chinese stocks reached a 6-year low.

§ Premiums dropped significantly owing to weak demand and bearish market
sentiment.

 

Major Environment, Social and Governance (ESG) Highlights

§ Milestone reached in Power Station 5 Block 4 with the arrival of M701JAC
Gas Turbine on 16 October 2023.

§ Safety Milestone: 7(th) consecutive summer of zero heat-related illnesses
and injuries.

§ Alba: 1(st) smelter in the GCC to attain 4-star audit rating by the British
Safety Council.

§ Launch of a mini-Safety Campaign 'Safety is Driven by You' on 10 December
2023.

§ Safety First, Safety Always: 13 million safe working hours w/o LTI on 23
January 2024.

§ Sixth edition of ESG Report (with Quality Assurance) released in Q4 2023.

§ Sustainability Triumph: SPL Treatment Plant exceeds target, converting
waste into valuable HiCal -- 40,185 MT of HiCal produced against nameplate
capacity of 30kMT - 35kMT.

 

Operational Highlights

§ Sales' volume rose to 1,603,011 metric tonnes (MT) despite market
challenges (+2.2% YoY).

§ Closed 2023 with an all-time Net Finished Production of 1,620,665 MT (+1.3%
YoY).

§ Value Added Sales averaged 68% of the total shipments vs. 66% in 2022. VAP
Sales' volume exceeds 1,095,000 MT (+5.1% YoY).

§ Inked 10-Year Gas Supply Deal with Bapco Energies with fixed price
structure for the first 5-year period at US$4/MMBTU on 23 January 2024.

§ Recipient of two major Investor Relations Awards for 2023 by Middle East
Investor Relations Association (MEIRA).

§ Upskilling more than 660 employees through programmes like Al Jisr, Skill
Matrix and comprehensive Training and Development Programme.

§ Alba celebrates its female employees on the occasion of Bahraini Women's
Day.

§ Through consistent efforts, AL HASSALAH Top up maintains US$115.34M
achieved savings in 2022.

 

Mixed Macroeconomic Outlook: Supply Constraints & Demand Upturn

§ Global demand is expected to see a gradual rebound in the latter half of
2024 fueled by anticipated Chinese stimulus measures into their economy,
prospects of interest rate cuts in the US boosting consumer spending and
gradual recovery in Europe as consumption picks up after a sluggish start.

§ Russian aluminum exports to EU are likely to decline due to expected trade
sanctions against Russia diverting exports to Asia particularly China.

§ US aluminum offtake is projected to grow in 2024 despite anticipated GDP
slowdown, mainly driven by investments and expansions in casting, extrusions,
and rolling sectors.

§ European demand is likely to remain passive in H1 2024 due to stagnant
construction activity & high interest rates dampening business and
consumer confidence.

§ Demand in China is expected to expand, despite a weak construction sector,
thanks to growth in auto and renewable energy sectors.

§ Global supply chain challenges have improved, but some risks remain on
routes like Panama and Suez Canals.

§ Bearish market sentiment is likely to persist with LME prices ranging
between US$2,000/t - US$2,200/t.

 

Evolving Beyond ESG & Safety Standards

§ Advance a culture of Safety where every action reflects our commitment to
zero harm.

§ Align with Bahrain's Objectives for 'Net Zero Emissions' by 2060 &
embrace sustainability (from sourcing to delivery) across our operations.

§ Exceed 2023 Net Finished Production of 1,620,665 MT in 2024 and launch e-AL
HASSALAH Savings Program.

§ Maintain active pursuit for sourcing Upstream to secure 1/3 Alumina Needs.

§ Leverage Aluminium Stewardship Initiative (ASI) and Ecovadis Certifications
to unlock new markets and boost VAP Sales.

§ Complete PS5 Block 4 Project by Q4 2024 and Solar Farm by Q2 2024 to scale
up our efficiency.

§ Complete Bechtel's Feasibility Study for Line 7 Class III by Q2 2024.

 

Commenting on Alba's financial performance for Full Year of 2023, the Chairman
of Alba's Board of Directors, Mr. Khalid Al Rumaihi stated:

"While navigating market headwinds in 2023 with volatile LME prices and
fluctuating premiums, we are pleased that Alba not only delivered higher sales
volume but also achieved overall good performance.

Despite these external factors, the Company's robust operational performance
in 2023 demonstrates its resilience and potential for stronger financial
results in a more favorable environment.

Having refreshed our Strategy for 2024-2026, we will be able to position Alba
for continuous success amidst market challenges while transforming challenges
into opportunities."

 

Adding further, Alba's Chief Executive Officer, Ali Al Baqali said:

"I'm incredibly proud of our team for doing more than necessary in a tough
year for the aluminium industry. While bearish market sentiment presented
significant challenges, our collective efforts on cost management and
operational optimization enabled us to achieve good results despite lower LME
prices and premiums and close 2023 with 12 million safe working hours without
LTI."

 

Alba Management will hold a conference call on Monday 18 February 2024 at 2 PM
Bahrain Time to discuss the Company's financial and operational performance
for the Full-Year of 2023 as well as outline the Company's Priorities for
2024.

ENDS

Group Photo

 

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

[Ticker: ALBH]

At plus-1.62 million metric tonnes per annum (mtpa) (2023), Alba is one of the
largest smelters in the world with more than 50 years of excellence in
Operations, Safety, Environment and Socio-Economic Development.

 

A blue-chip asset of the Kingdom of Bahrain, Alba produces high-quality
Aluminium products in the form of Standard and Value-Added Products (VAP)s,
which are exported to more than 240 global customers through its sales offices
in Europe (Zurich), Asia (Singapore) and subsidiary office in the U.S. Alba is
dual 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 holds
globally-recognised certifications such as ISO 9001, ISO 14001, ISO 27001, ISO
45001, IATF 16949:2016, ISO 22301:2012 Business Continuity Management System
(BCMS) and ASI Performance Standard Certification and Ecovadis Certification.

 

As the first aluminium smelter in the Middle East, Alba sits at the heart of a
thriving aluminium downstream sector in Bahrain, which accounts for
approximately 12% of the Kingdom's GDP. As one of the biggest national
companies, it has ensured not only the employment of Bahrain nationals (85% in
2022) but also the enhancement of their capabilities through education,
training, and development initiatives at every stage of their career.

 

Alba is recognised as one of the top industrial companies in the world with
high standards in Environment practices, Social contribution and Corporate
Governance. Launched in February 2022, the Company's ESG Roadmap outlines 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 5-7 MW Solar Farm Project and
the Power Station 5 Block 4 Project are tangible efforts to meet the goals of
the Net Zero Carbon targets by 2060 led by HRH the Crown Prince and Prime
Minister of Bahrain. Alba will also play a crucial role in the upcoming
Aluminium Downstream Park, which will increase the contribution of non-oil
sectors to the GDP of Bahrain.

 

Alba's motto 'Safety First, Safety Always' has ensured that the Safety and
well-being of its employees and contractors' workforce remain a top priority.
The Company broke all previous records in Safety and topped 30 million Safe
working-hours without Lost Time Injury (LTI) on 01 September 2022 for the
first-time in its history. The Company has been recognised internationally for
its excellent Safety and Health track record with awards such as the RoSPA
Gold Medal Award (9 years in a row) and International Safety Award with Merit
from British Safety Council, as well as six major National Safety Council
(NSC) USA awards for 2021. Alba has also 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.

 

Alba Power Station 5 Block 4 Expansion Project

 

Alba Power Station 5 (PS5) Block 4 is a Combined Cycle Power Plant that is an
expansion of the existing PS5.

PS5 Block 4 Project is the addition of a fourth Block of similar 1:1:1
configuration with J-class gas turbine technology and with minimum nominal ISO
rating of a 680.9 MW and includes tie into the existing 220kV Substation. The
efficiency of this combined cycle power plant is much higher than the combined
cycle power plants of PS3 and PS4. On completion of PS5 Block 4 Expansion
Project, the nameplate capacity of PS5 will increase from 1,800 MW to 2,481
MW.

Mitsubishi Power & SEPCOIII consortium will be responsible to design,
engineer, procure, construct and commission Block 4. PS5 Block 4 commercial
operations are expected to begin in Q4 2024.

 

Alba Stakeholder Engagement Plan

Alba's 'Stakeholder Engagement Plan' outlines the Company's communication with
all its stakeholders including the community, the Environment and Social
impacts as well as mitigation controls for its operations in addition to its
external Grievance Mechanism through the Code of Conduct, for any
stakeholder(s) or the public to raise any concerns or issues.

Scan the above to Alba's Stakeholder Engagement Plan

 

Alba's External Grievance Mechanism

Alba Integrity Line
(https://www.albasmelter.com/About%20Alba/Code-of-Conduct/Pages/default.aspx)
is an independently operated confidential reporting hotline for all
stakeholders, employees, contractors and commercial partners, and broader
community, to report on a confidential basis, any potential breaches of Alba's
Code of Conduct, as well as Environment and Social (E&S) Impacts. Alba
Integrity Line is available in multiple languages - via a toll-free phone
system or via the intranet and the Company's website www.albasmelter.com
(http://www.albasmelter.com) 24 hours a day.

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 (http://www.albasmelter.com)

 

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Scan the above to access Alba Website

 

 

 

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