REG - Aluminium Bahrain - Half-year Report

Aluminium Bahrain BSCAnnouncement

09/08/2023 15:00

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RNS Number : 8390I  Aluminium Bahrain B.S.C.  09 August 2023

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Media Release - Wednesday 09 August 2023

 

Alba Discloses its Financial Results for the Second Quarter and H1 of 2023

 

"We have maintained our position amidst mixed macroeconomic backdrop and
delivered a strong performance in the second quarter over many operational
metrics:

-     Our production reached 405,628 metric tonnes (MT), an increase of
9,085 (MT) versus Q2 2022

-     Our Sales' volume topped 392,258 MT, up by 3,816 MT versus Q2 2022

-     Value Added Products touched 70% of Total Sales (70% in Q2 2022)
underlining a solid demand for these Products

This performance would have allowed us to beat Q2 2022 financial performance
if LME prices and premia were to remain the same (LME prices and premia
combined have dropped by 61% Year-over-Year).

Our financial resilience has allowed us to return capital to our shareholders
with Fils 13.28 per share as interim cash dividend amounting to BD18,801,617.

As we look forward, we remain optimistic to stay on course as we progress with
Line 7's Feasibility Study",

as stated by the Chairman of Alba's Board of Directors, Shaikh Daij Bin Salman
Bin Daij Al Khalifa, on Alba's results for the second quarter of 2023.

 

Q2 & H1 2023 Financial Performance

Aluminium Bahrain B.S.C. (Alba) (Ticker Code: ALBH), the world's largest
aluminium smelter w/o China, has reported a Profit of BD29.9 million (US$79.5
million) for the second quarter of 2023, down by 83.6% Year-over-Year (YoY),
versus a Profit of BD181.9 million (US$483.9 million) for the same period in
2022. The Company reported Basic and Diluted Earnings per Share of fils 21 for
Q2 2023 versus Basic and Diluted Earnings per Share of fils 128 in Q2 2022.
The Total Comprehensive Income for Q2 2023 stood at BD34.4 million (US$91.5
million) versus Total Comprehensive Income for the second quarter of 2022 of
BD201.9 million (US$536.9 million) - down by 83% YoY. Gross Profit for Q2 2023
was 67.9 million (US$180.6 million) versus BD208 million (US$553.2 million)
for the same period in 2022 - down by 67% YoY. With regards to the Revenue
from contracts with customers in Q2 2023, Alba generated BD387 million
(US$1,029.3 million) versus BD520.4 million (US$1,384 million) in Q2 2022 -
down by 25.6% YoY.

For the First Half of 2023, Alba has reported a Profit of BD77.4 million
(US$205.7 million), down by 76.5% YoY versus a Profit of BD328.7 million
(US$874.3 million) for the same period in 2022. The Company reported Basic and
Diluted Earnings per Share of fils 55 for H1 2023 versus Basic and Diluted
Earnings per Share of fils 232 for the same period in 2022. Alba's Total
Comprehensive Income for H1 2023 was BD79.8 million (US$212.2 million), down
by 78% YoY, compared to a Total Comprehensive Income of BD357.9 million
(US$951.8 million) in H1 2022. Gross Profit for the First Half of 2023 was
BD147.8 million (US$393 million) versus BD386 million (US$1,026.7 million) in
H1 2022 - down by 62% YoY.  Alba generated in H1 2023 Revenue from contracts
with customers of BD757 million (US$2,013.2 million) versus BD975.3 million
(US$2,593.9 million) in H1 2022 - down by 22.4% YoY.

Total Equity as at 30 June 2023 stood at BD1,771.2 million (US$4,710.6
million), down by 3%, versus BD1,822.5 million (US$4,847 million) as at 31
December 2022. Alba's Total Assets as of 30 June 2023 were BD2,669.2 million
(US$7,099 million) versus BD2,617.2 million (US$6,961 million) as at 31
December 2022 - up by 2%.

Alba's Board of Directors have proposed to pay an interim cash dividend of
Fils 13.28 per share (excluding the treasury shares) amounting to BD18,801,617
to Alba's shareholders as of the Record date as follows:

 Event                                                                           Date
 Board Meeting Date                                                              09 August 2023
 Cum-Dividend Date

 (Last day of trading with entitlement to dividends)                             15 August 2023
 Ex-Dividend Date

 (First day of trading without entitlement to dividends)                         16 August 2023
 Record Date

 (The Day on which all shareholders whose names are on the share register will   17 August 2023
 be entitled to dividends)
 Payment Date

 (The Day on which the dividends will be paid to the entitled shareholders       31 August 2023
 subject to CBB approvals)

 

 

 

Industry Highlights

Weak Demand due to Economic Uncertainty (+2% YoY)

§ Q2 2023 has seen a continuation of economic uncertainty amidst bearish
manufacturing activity and ongoing interest rate hikes by US Federal Reserve
and European Central Bank (recent increase of 25 basis points)

§ As Chinese Government has stepped up monetary easing measures, consumption
has started to improve (+6% YoY)

§ Middle East demand almost flat (+1% YoY)

§ Eurozone has been in a recession on the back of high inflation and sluggish
consumer spending while US consumption is weak owing to slow manufacturing
activity: demand dropped by 8% YoY and 7% YoY respectively

 

World Market Supply Almost Flat (+1% YoY)

§ Despite recent smelter cuts in Yunnan province, China increased its
production (+1% YoY)

§ Europe is leading the world ex-China with its output cuts (-5% YoY) owing
to high energy prices [curtailed capacity restarts are challenged in the world
ex-China as energy prices remain expensive and no significant new projects are
ramping up in 2023]

§ Middle East supply down by 1% YoY

§ Russian metal is flowing to China while its exports to EU and US have
dropped by 30% YoY and 91% YoY respectively

§ As production is growing at a slower pace than consumption, the world
market is in deficit with China (-0.35 million MT) while in surplus w/o China
(+0.07 million MT)

 

LME Price & Premiums

§ LME Price remained under pressure as bearish market sentiment dominated the
trading activity. LME-Cash averaged US$2,263/t in Q2 2023 -- down by 21% YoY

§ LME inventories at low levels at ~0.5 million MT (up by 45% YoY) with
growing inventories of Russian metal in LME-registered warehouses causing
concern

§ Premium prices on the swing: US Midwest dropped whereas MJP and DDP
Rotterdam improved

 

 

 

Alba Environment, Social and Governance (ESG) Highlights

§ Alba Accelerates its Transformation to Industry 4.0 with the completion of
online performance monitoring system for its Power Stations

§ Alba commissioned three solar charging stations that will cater to Electric
Vehicles (EVs) and Solar-Electric powered industrial Personnel Carriers (PCs)

§ Alba receives ASI Chain of Custody (CoC) Standard Certification for
Responsible Production

§ Alba receives 2023 International Safety Award with Merit from the British
Safety Council

§ Alba wins RoSPA's President Award following 10 consecutive Gold Awards for
the Safety and Health Excellence

§ Alba - First Industrial Company in the Region and Bahrain to achieve ISO
18788:2015 Certification

§ 4 million safe working hours without LTI achieved on 12 July 2023

 

Alba Major Operational Highlights (Q2 2023)

§ Sales' volume topped 392,258 metric tonnes (MT), up by 1% YoY while
Production reached 405,628 MT, up by 2% YoY

§ Value Added Sales averaged 70% of the total shipments [VAP: 272,944 MT in
Q2'23 versus 270,301 MT in Q2'22]

§ Alba's Line 6 New Nameplate Capacity Jumps to 560,000 MT by increasing the
current from 460 kA to 478 kA

§ Alba Holds Reverse Insurance Roadshow with Major Insurance and Reinsurance
Markets

§ Alba wins the 'Metals & Mining Deal of the Year' by Bonds, Loans &
Sukuk Middle East Awards 2023

§ Completed Independent Limited Assurance on the computation of selected
sustainability performance indicators related to Green Refinancing for
Syndicated Loan Facility

§ Completed Assets' Valuation for Insurance purposes

§ AL HASSALAH Top up: sustain achieved savings in 2022 (US$115.34M) in this
year

 

Mixed Macroeconomic Outlook: Uncertain & Inflationary Market Sentiments

§ Market uncertainty will continue to cloud the Aluminium market and LME
prices [no sign of demand recovery in Asia, Europe and US in the short-run)

§ Carbon Border Adjustment Mechanism (CBAM) regulation would apply to
aluminium products starting with a transitional reporting-only period
effective October 2023. European producers would become liable for their
emissions while importers accountable for CBAM

§ With Aluminium producers being price takers, it is expected that they would
pay for carbon emissions in the future

§ Global premia to remain uncertain

§ Bearish market sentiment will continue to weigh on Aluminium market and LME
prices will range between US$2,100/t - US$2,200/t for the remainder of the
year

 

2023 Alba Priorities

§ Continue our Safety journey by adhering to 'Safety is our Operating
License'

§ Further sustainable value across our value chain and in line with Bahrain's
objectives for 'Net Zero Emissions' by 2060

§ Increase Net Finished Production by Forced Cooling Network (> 1,600,111
MT) and sustain AL HASSALAH achieved savings with AL HASSALAH Top Up

§ Continue to screen potential Upstream Opportunities to secure 1/3 Alumina
requirements

§ Capitalise on Aluminium Stewardship Initiative (ASI) and Ecovadis
Certifications to penetrate new markets and amplify VAP Sales

§ Progress with PS5 Block 4 and Solar Farm to scale up our efficiency

§ Accelerate Bechtel's Feasibility Study for Line 7

§ Publish 7(th) edition of Alba's Sustainability Report 2022 in Q4 2023

 

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

"Through our ongoing cost discipline and operational improvements, we have
performed well despite the bearish market sentiment and delivered a good
performance when compared to our peers.

In a changing macroeconomic landscape, we remain focused to deliver on what we
really have control on: Safety, Productivity and Cost."

Alba Management will hold a conference call on Monday 14 August 2023 at 2:30
PM Bahrain Time to discuss the Company's financial and operational performance
for Q2 and H1 2023 as well as outline the Company's priorities for 2023.

 

Ends

 

 

 

 

Photo Caption

Chairman of the Board, Shaikh Daij bin Salman bin Daij Al Khalifa

 

 

Chief Executive Officer, Ali Al Baqali

 

 

 

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

[Ticker: ALBH]

At plus-1.6 million metric tonnes per annum (mtpa) (2022), 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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