Qatar Aluminium Manufacturing Company (Qamco) yesterday reported a net profit of QR124m for the first quarter (Q1 2021), an increase of over 1,000 percent compared to QR11m during the same period last year, registering the Company’s best quarterly profit since incorporation.
Earnings per share (EPS) stood at QR0.022 compared to QR0.002 for Q1 2020. Qamco’s improved financial results during the period was driven by growth in global aluminium prices on the back of improved macroeconomic dynamics.
The overall growth in average realised selling prices increased by 15 percent in the first quarter against the same period in 2020 which contributed QR83m positively to the net profits in Q1 2021 compared to the same period last year.
The Company, which is a 50 percent shareholder in Qatalum (a joint venture of Qamco), also reported that share of joint venture’s (JV) revenue increased by 13 percent to reach QR639m compared to QR565m in Q1 2020.
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) also increased by 52 percent to QR252m in Q1 2021 compared to QR166m during the same period in 2020. As the global markets started to show signs of recovery since the later part of 2020, the aluminium industry also picked up its pace, whereby, sectors such as construction and automotive witnessed growth, and a renewed global demand for primary aluminium was noted, while supply side remained muted.
All of these factors translated into a sequential growth in primary aluminium prices and improved margins.
Qamco’s financial position continued to remain robust with the liquidity position at the end of March 31 reaching QR669m in form of cash and bank balances (including proportionate share of cash and bank balances of the joint venture). During the first quarter, Qamco’s JV generated positive share of operating cash flows of QR180m, with a share of free cash flows of QR133m.
On the other hand, with production levels remained flat, sales volumes slightly declined by 1 percent and contributed QR9m negatively to net profits for the first quarter against Q1 2020.
Although sales volumes were marginally lower than last year, Qamco’s JV was successful in selling 100 percent of value-added products (VAP) with no sales of standard ingots during the period. The shift from sales of standard ingots to VAP supported the overall evolution of EBIDTA margins.
The cost of goods sold for the first quarter remained lower compared to the same period last year, mainly on account of decline in raw material costs, and cost optimisation initiatives which resulted in savings in manpower costs.
On overall basis, the decline in cost of goods sold contributed QR20m positively to the net profits for the first quarter. Moreover, due to an overall decline in interest rates, JV’s finance costs for the financial period also declined by 57 percent against Q1 2020, and contributed QR24m positively to Qamco’s net earnings for the first quarter.
Qamco’s JV continues to maintain efficiency and cost competitiveness in terms of its production and operations, and is conducting CAPEX projects as per the planned schedule for the year, in line with the operational requirements.
The continued efforts to manage cost have reflected positively on the JV’s operating cost structures, while keeping the Company on the lower side of the cost curve among global peers.
Qamco will host an IR earnings call to discuss its first quarter results, business outlook and other matters on May 5 at 12:30pm Doha time.
The IR presentation that accompanies the conference call will be posted on the ‘financial information’ page within the Investor Relations section of Qamco’s website.
