Doha: Qatar Aluminium Manufacturing Company (Qamco) has reported a net profit of QR80m for the thirteen-month financial period ended December31, 2019.
Qamco, a QSE listed company, is a 50 percent joint venture partner in one of the world’s most efficient, low-cost smelters that produces premium aluminium products.
Financial performance in 2019 was largely impacted by external macroeconomic factors beyond the Company’s control. These adverse conditions – which included trade conflicts, overcapacities and slowing global GDP growth - directly translated into declining prices for aluminium, which led to a decrease in Qamco’s earnings.
For the first financial year consisting of the 13-month period that ended December 31, 2019, Qamco’s share of the joint venture’s EBITDA stood at QR704m for 2019. Qamco’s share of revenue for the financial period amounted to QR2.7bn. The Company recorded an earnings per share (EPS) of QR0.014 for the first financial period ended December 31, 2019.
During the year, profitability remained resilient despite a combination of factors affecting performance, including lowered revenues, one-off impairment losses and increased financing costs on account of interest costs recognized in leases capitalized under IFRS 16, which were partially offset by one-off sale of alumina and insurance claims.
Qamco’s average selling prices fell by 12 percent during 2019, which was largely attributable to the decline in global market prices for aluminium, which led to a decrease of QR365m in net earnings when compared with the last pro-forma period.
This was slightly offset by the positive variance in sales volumes, which marginally increased by 2 percent, and translated into an increase of QR45m in the net earnings.
Environmental restrictions and sanctions played a vital role in affecting aluminium prices.
Also, the channeling of historically built excess inventories by aluminium producers into the market pressured prices. By contrast, Qamco’s LME price premiums remained stable which is a reflection of the JV’s resilience in the negative environment. LME premiums averaged approximately 12 percent of LME realized prices.
The overall cost of goods sold remained stable on account of declining raw material prices, which was offset primarily by high energy cost consumption during steam turbine overhauls.
Alumina prices declined at a slower rate than aluminium prices, which depressed the industry margins. At the same time, Qamco’s JV leveraged its contracts for alumina supplies to outperform the market, which led to supply chain optimization.
This competitive advantage will continue to contribute sustained growth and will support the JV to maintain its market standing.
Qamco’s total assets as of December 31, 2019 stood at QR5.7bn, with bank balances amounting to QR103m.
Qamco’s share of net debt in the JV decreased by 17 percent during 2019, to reach QR1.9bn as of December 31, 2019, after considering share of cash and bank balances amounting to QR497m.
Abdulrahman Ahmad Al Shaibi, Chairman of the Board of Directors, Qamco, said: “Although the macroeconomic environment was challenging in 2019, the Company in its first full year of operation demonstrated its underlying strength as a key investor in one of the world’s lowest-cost, most-efficient aluminium smelters.
Throughout the year, in an adverse market, Qamco’s JV managed to continue with profits in the face of falling aluminium prices. This was accomplished by rolling out a number of cost-conservation measures, while ensuring that the Company remained well-placed to maximize value for shareholders.”
