Doha: Qatar Aluminium Manufacturing Company (Qamco), a 50 percent joint venture partner in Qatar Aluminium Company (Qatalum), yesterday reported a net profit of QR803m for the nine-month period ended September 30, 2022, an increase of 54 percent compared to QR521m during the same period last year. The company’s earnings per share (EPS) also grew by 54 percent to QR0.144 from QR0.093.
The macroeconomic environment for the aluminium markets remained volatile throughout this year. Several factors impacted the commodity markets at the macro level, which cascaded to the supply-demand dynamics of aluminium and led to volatilities in prices.
In the start of the year, demand for primary aluminium demonstrated strength across key aluminium intensive sectors, like automobiles (especially electric vehicles), construction, renewable energy, and packaging. However, recently demand for aluminium was impacted by China’s strict COVID related lockdowns, coupled with slowdown in the Chinese construction sector. In parallel, higher-than-expected inflation led to monetary tightening by most of the Central Banks, impacting industrial demand for most of the commodities.
On the other hand, exorbitant energy prices in Europe has put most of the European smelters in a challenging situation to maintain capacity. Also, as annual contracts are rolled for Western consumers of metal, trade disengagements from Russia, amid geo-political tensions, creating uncertainty in the commodity markets, with a growing risk of inventory builds.
On an overall basis, aluminium prices demonstrated essentially bullish trends during early parts of 2022, amid constructive demand and supply shortages. However, since the mid-year LME prices softened on account of uncertainties over recessionary fears and limited demand.
Qamco’s share of JV’s revenue increased by 42 percent to reach QR3.020bn as compared to QR2.127bn for 9M-21. EBITDA increased by 32 percent and reached QR1.208bn for 9M-22 in comparison to QR918m for 9M-21.
Qamco’s improved set of financial results for 9M-22 versus 9M-21, were largely attributed to an overall growth in average realised selling prices. Average realised selling price witnessed an increase of 41 percent during 9M-22 versus 9M-21 to reach $3,489/MT, and contributed QR887m positively to the net profit for nine-month period ended September 30, 2022 in comparison to the same period of last year.
Production and sales volume levels remained relatively flat during the period versus 9M-21. Qamco’s JV was successful in maximising production of value-added products (VAP), as minimal sales of standard ingots were made during current period. Higher premiums were realised during 9M-22, mainly linked to better market sentiments prevailed during the first nine months of the year versus last year.
Operating cost for 9M-22 remained higher versus 9M-21, mainly on account of higher raw material costs. On overall basis, the increase in operating expenses contributed QR611m negatively to the net profits for 9M-22 versus the same period last year.
Compared to 2Q-22, share of JV’s revenue decreased by 21 percent, while Qamco’s net profits declined by 48 percent. A key contributor towards this decline was the lower selling prices realised during 3Q-22 versus 2Q-22, which decreased by 15 percent on quarter-on-quarter basis. Decline in selling prices, was mainly linked to macroeconomic headwinds.
Also, sales volumes declined by 7 percent, negatively affecting the overall financial performance on a quarter-on-quarter basis. On overall basis, lower realised selling prices coupled with lower sales volumes led to 21 percent decline in Qamco JV’s topline for 3Q-22 in comparison to 2Q-22.
Qamco’s financial position continued to remain robust with the liquidity position at the end of September 30, 2022 reaching QR1.763bn in form of cash and bank balances (including proportionate share of cash and bank balances of the joint venture). During 9M-22, Qamco’s JV generated share of operating cash flows of QR959m, with a share of free cash flows of QR779m.
Qamco’s JV continue to maintain high efficiency and cost competitiveness in terms of its production and operations. Health and safety measures continue to remain a priority to ensure reliability of assets, while achieving operational excellence. CAPEX projects were conducted as planned and in line with the operational requirements. The CAPEX programs will support JV’s drive for operational efficiency, while reducing carbon footprints.
In accordance with the proposed amendments to the Articles of Association approved during the Company’s Extraordinary General Assembly meeting held in March 2022, the Board of Directors can decide on the foreign ownership limit, as per applicable laws and regulations, and may increase the foreign ownership limit up to 100 percent. Accordingly, a decision was made by the Company’s Board of Directors at its meeting held in April 2022 to increase the ownership limit for non-Qatari shareholders to 100 percent.
Pursuant to a decision made by the Council of Ministers in its meeting held on October 12, 2022, it was approved to increase the percentage of ownership of a non-Qatari investor in the Company’s capital up to 100 percent. All necessary measures will be taken in this regard with the relevant authorities.
Qamco has also appointed Lolwa Khalil Salat as a member of the Board of Directors. Salat holds a Bachelor’s degree in Finance from Northeastern University, and a Master’s degree in Finance from Harvard University. Salat joined QatarEnergy in 2011, where she progressed through various leadership positions and currently serves as the Manager of Public Relations and Communication Department of QatarEnergy.
Qamco also thanked Mohammed Jaber Al Sulaiti for serving Qamco as its Board member since its incorporation.
Qamco will host an IR earnings call with investors to discuss its 9M-22 results, business outlook and other matters, on Monday, October 31, 2022 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.
