Doha: Qatar Aluminium Manufacturing Company (Qamco), a 50 percent joint venture partner in Qatar Aluminium Company (Qatalum), yesterday reported a net profit of QR521m for the nine-month period ended September 30, 2021 (9M 2021), recording an increase of 4,242 percent compared to QR12m during the same period last year. The company posted an earnings per share (EPS) of QR0.093 compared to QR0.002 during the same period in 2020.
The Company has set a record for its highest ever quarterly net profit of QR233m since incorporation, capturing benefits of strong aluminium pricing amid renewed demand with supply remained constrained. Qamco’s share of revenue from the JV increased by 32 percent to QR2.127bn during 9M 2021 from QR1.607bn during the same period last year, while its share of EBITDA from the JV rose by 104 percent to QR918m from QR450m, with an EBTIDA margin of 43 percent. Qamco’s closing cash balance (including share of cash in Qamco’s JV) stood at QR1.121bn.
Prices of aluminium continue to show strength on the back of renewed global demand, with sectors such as construction and automotive industries witnessing growth, as global economies sequentially recovered linked to market reopening on the back of successful ongoing vaccination drive. Also, given 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.
On supply side, as the power crisis in major markets has become more acute and while decarbonisation linked policy cuts remained aggressive, significant aluminium capacity has been curtailed helping accelerated inventory draws. On overall basis, as demand remained buoyant, with supply deficits continued with lower inventory levels, have sent primary aluminium prices to multi-year high and led to improved margins.
Qamco’s improved financial results were largely attributed to an overall growth in average realised selling prices which increased by 37 percent during the first nine months of the year compared to the same period last year, and contributed QR597m positively towards bottom-line profitability of Qamco.
Production activity remained stable and volumes witnessed a marginal increase of 1 percent during 9M 2021 compared to the same period last year. Sales volumes slightly declined by 3 percent reflecting the timing of shipment, consequently contributed QR77m negatively to Qamco’s net profits. Although sales volumes were slightly lower than last year, Qamco’s JV remained successful in selling 100 percent of value-added products (VAP), while no sales of standard ingots were made during the current period. This production shift since latter part of last year has positively supported EBITDA margin evolution for the JV.
JV’s cost of goods sold for 9M 2021 was higher compared to the same period last year, mainly on account higher raw material costs, partially offset by favourable inventory movements and cost optimisation initiatives. On overall basis, increase in cost of goods sold contributed QR29m negatively to Qamco’s net profits for 9M 2021 versus 9M 2020.
Finance cost for 9M 2021 witnessed a decline of 38 percent versus same period last year, on account of decline in interest rates and absence of unamortised portion of financing cost being written-off last year. The decline in finance cost contributed QR32m positively to Qamco’s net earnings for 9M 2021 in comparison to 9M 2020.
Compared to the second quarter of the year (Q2 2021), share of JV’s revenue improved by 8 percent, while Qamco’s net profits improved by 22 percent. The key contributor towards this growth was an overall increase in average selling price, which continued its positive trajectory on the back of continued macroeconomic tailwinds echoed from previous quarters, while supply side continue to remain constrained. Average realised selling prices increased by 13 percent during the third quarter of the year (Q3 2021) versus Q2 2021. Sales volumes on the other hand declined marginally by 4 percent versus Q2 2021.
Qamco’s financial position continued to remain robust with liquidity position at the end of September 30, 2021 reaching QR1.121bn in form of cash and bank balances (including proportionate share of cash and bank balances of the joint venture). During 9M 2021, Qamco’s JV generated share of operating cash flows of QR740m, with a share of free cash flows of QR576m.
The Company’s JV continues to maintain efficiency and cost competitiveness in terms of its production and operations. CAPEX projects were conducted as per the planned schedule for the year, and in line with the operational requirements. These CAPEX programmes will support JV’s drive for operational efficiency and reduce carbon footprints.
Qamco’s JV continued its efforts to manage controllable cost through optimisation programme. Until 9M 2021, the JV’s realised cost savings were in excess of expectations, via higher throughput and lower operating cost expenditures, which reflected positively on JV’s operating cost base, while keeping the JV on lower side of the cost curve in comparison to global peers.
Qamco will host an IR earnings call with investors to discuss its financial results, business outlook and other matters, on October 31, 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.
