Qatar Aluminium Manufacturing Company (QAMCO) has reported a net profit of QR12.3m for the nine months period ended September 30, 2020, with earnings per share (EPS) of QR0.002. QAMCO, a QSE-listed company, is a 50 percent joint venture partner in a successful smelter that produces premium high quality primary aluminum products in Qatar. The financial performance of QAMCO during the first nine months of 2020 continued to be impacted by external macroeconomic factors beyond the Company’s control, which weighed on the Company’s financial performance since last year. Results were also affected on account of the pandemic causing the slowdown of major global industries across the automotive, transport jets and construction sectors. QAMCO’s share of the revenue for the financial period amounted to QR1.6bn, down by 14 percent, compared to nine months period of last year .
Sales volume for the nine months period was marginally higher by 1 percent than last year, as QAMCO’s JV swiftly shifted the production to standard ingots, whereas, the demand for premium aluminum products and alloys used by various industries declined. Weakened demand on the back of economic slowdown and continued production surplus negatively affected the selling prices during 2020. Although, there were some recoveries in prices noted in the latter part of Q3-20, while the overall price sentiments remained negative throughout the nine months period ended 30 September 2020.
QAMCO JV’s average selling prices during the first nine of this year fell by 16 percent, compared to the same period last year, and contributed QR292m negatively to the net profits for the nine months period ended September 30, 2020, as compared to the same period last year.
This was partially offset by the sales volumes, which positively contributed QR20m to Q3 2020 net profits, as compared to last year (Q3 2019). QAMCO’s share of joint venture’s EBITDA stood at QR439m for the nine months period ended September 30, 2020, down by 15 percent compared to the same period last year1, but the EBITDA margins remained resilient in the current turbulent market conditions and stood at 27.3 percent, as compared to 27.5 percent for Q3 2019. The Company’s JV was able to successfully contain its raw materials, energy, manpower and other direct costs by 12 percent for Q3 2020 versus Q3 2019.
The overall decline in the cost of goods sold contributed QR191m positively to the net profits for the nine months period ended September 30, 2020, as compared to the same period of 2019. QAMCO’s share of debt in the JV declined by 8 percent to reach QR2.2bn as at September 30, 2020, compared to the balance as at December 31, 2019. The decline was mainly on account of principal repayment during the period. During Q1 2020, QAMCO’s JV successfully refinanced its outstanding loan amounting to $1.3bn for a period of five years.
This refinancing deal is not only expected to bring free cash flows to the JV, but will also provide new avenues of flexibility to endure market volatilities, which in turn is expected to maximise shareholder value. QAMCO’s financial position continues to remain robust despite several macroeconomic headwinds, with the liquidity position at the end of September 30, 2020, reaching QR670m in cash and bank balances (including proportionate share of cash and bank balances of the joint venture), after accounting for dividend payments for 2019. During the period, QAMCO’s JV generated a positive share of operating cash flows of QR552m, down by 43 percent compared to Q3 2019, with a share of free cash flows of QR346m, up by 34 percent compared to the same period of last year.
Abdulrahman Ahmad Al Shaibi, Chairman of the Board of Directors, QAMCO, said: “Despite of the macroeconomic headwinds affecting the global markets, QAMCO continued to rely on its core strengths, based on which QAMCO’s JV managed to remain profitable in a market where global aluminum prices continued to show downwards trends amid unprecedented challenges posed to businesses globally due to COVID-19 pandemic. “In response to limit the spread of COVID-19 pandemic, our joint venture continued to implement measures to ensure safety and business continuity.
On the other hand, our sales and marketing partner diligently monitored the market situation and acted effectively to minimize the risk of disruptions to the supply chain. Given all of these efforts, there were no plant disruptions noted nor were there any effects on the JV’s supply chain activities and our teams continued to outperform the market challenges. Going forward, adaptation will be a key to ever-evolving market dynamics which will bring in increased flexibility and would better position us for the long-term outlook and maintain our market standing. ”
