Qatar Aluminum Manufacturing Company Q.P.S.C. (QAMCO or the Company; QE Ticker: QAMC), a 50% joint venture partner in Qatar Aluminum Company (Qatalum), yesterday reported a net profit of QR288m for the six-month period ended 30 June 2021, with an earnings per share (EPS) of QR0.052.
Commenting on the financial and operational performance for the six-month period ended 30 June 2021, Abdulrahman Ahmad Al Shaibi, Chairman of the Board of Directors, QAMCO, said “We benefitted from a strong sequential macroeconomic recovery coupled with supply constraints, which translated into healthier demand for our premium products, resulting in an improved set of financial results, since QAMCO’s incorporation. While macro-conditions remained buoyant, we continued to rely on our core business values, flexibility of operations, supported by efficient supply chain and persistent cost optimization efforts. Going forward, our competitive advantages coupled with our operational excellence, would position us better for our long-term goals.”
Prices of aluminium, continue to climb on the back of renewed global demand, whereby sectors such as construction and automotive industries witnessed growth, as the global economies started to show signs of recovery since later part of 2020. With aluminium being a key input for electric vehicles (EVs), wind turbines and solar power, bringing an additional layer of long-term demand for primary aluminium.
Furthermore, global climate initiatives are also providing structural support to aluminum markets, given its major role in decarbonization and playing a key part in creating supply deficits.
All of these factors translated into a sequential growth in prices of primary aluminium along with improved margins.
QAMCO recorded a net profit of QR288m for H1-21, as compared to QR15m for H1-20, with earnings per share (EPS) of QR0.052 for H1-21 versus QR0.003 for H1-20. Share of JV’s revenue increased by 21% to reach QR1,353m as compared to QR1,121m for H1-20. EBITDA increased by 78% and reached QR558m for H1-21 in comparison to QR313m for H1-20.
QAMCO’s improved financial results for H1-21 versus H1-20, were largely attributed to an overall growth in average realized selling prices in comparison to H1-20 results. Average realized selling price witnessed an increase by 26% in H1-21 versus H1-20 and contributed QR292m positively to the net profit for six-month period ended 30 June 2021, as compared to the same period last year.
Production levels increased by 1% during the period compared to H1-20, while sales volumes slightly declined by 4% and contributed QR61m negatively to net earnings for H1-21 versus H1-20. Although sales volumes were slightly lower than last year, but QAMCO’s JV was successful in selling 100% of value-added products (VAP), and no sales of standard ingots were made during current year. The shift from sales of standard ingots to VAP supported the positive trajectory of EBIDTA margins.
Cost of goods sold for H1-21 remained low versus H1-20, mainly on account lowered manpower cost and favorable inventory movements, partially offset by higher raw material costs. On overall basis, the decline in cost of goods sold contributed QR22m positively to QAMCO’s net profits for H1-21 versus H1-20.
Moreover, due to the overall decline in interest rates and one-off unamortized portion of financing cost being written-off last year, JV’s finance costs for 1H-21 declined by 44% versus H1-20 and contributed QR28m positively to QAMCO’s net earnings for H1-21 in comparison to H1-20.
QAMCO’s financial position continued to remain robust with the liquidity position at the end of 30 June 2021 reaching QR812m in form of cash and bank balances (including proportionate share of cash and bank balances of the joint venture).
During H1-21, QAMCO’s JV generated share of operating cash flows of QR393m, with a share of free cash flows of QR276m.
QAMCO’s JV continues to maintain efficiency and cost competitiveness in terms of its production and operations. On HSE, key focus for QAMCO’s JV has remained on employee’s safety, wherein, zero incidents were reported during H1-21.
During the period, QAMCO’s JV signed an agreement to generate more sustainable and secure power, which is expected to enhance JV’s power output while improving plant efficiency and reducing carbon emissions.
QAMCO’s JV is conducting its CAPEX projects as per the planned schedule for the year, and in line with the operational requirements. These CAPEX programs will support QAMCO’s JV’s drive for operational efficiency and reduce carbon footprints.
QAMCO’s JV continued efforts to manage its controllable cost via optimization program. Until H1-21, the JV’s realized cost savings were in excess of expectations, via higher throughput and lowered operating cost expenditures, which reflected positively on JV’s operating cost base, while keeping the JV on the lower side of the cost curve among global peers.
QAMCO will host an IR earnings call with investors to discuss its 1H-21 results, business outlook and other matters, on Wednesday, August 11, 2021 at 1.30pm Doha time. The IR presentation that accompanies the conference call will be posted on the ‘financial information’ page within the Investor Relations section at QAMCO’s website.
