Manama, May 4 (BNA): Aluminum Bahrain B.S.C. (Alba) (Ticker symbol: ALBH), the world’s largest aluminum smelter outside China, reported profits of BD 47.5 million (US$ 126.2 million) for the first quarter of 2023, down 68% year-on-year, for a profit of BD 146.8 million. Bahraini Dinar ($390.4 million) for the same period in 2022. The company announced basic and diluted earnings per share of 34 fils for the first quarter of 2023 compared to 104 fils for the same period in 2022.
Total comprehensive income for the first quarter of 2023 was BD 45.4 million (US$ 120.7 million) compared to BD 156 million (US$ 415 million) for the same period in 2022 – down by 71% year-on-year. Gross profit for the first quarter of 2023 was BD 79.9 million (US$ 212.4 million) compared to BD 178 million (US$ 473.4 million) for the same period of 2022, a decrease of 55% year-on-year.
In terms of revenue from contracts with customers in the first quarter of 2023, Alba generated BD 370 million (US$ 984 million) as against BD 455 million (US$ 1,210 million) in the first quarter of 2022 – down by 19% on an annual basis.
Total equity as of March 31, 2023 amounted to BD 1,738.3 million (US$ 4,623 million), a decrease of 5%, compared to BD 1,822.5 million (US$ 4,847 million) as of December 31, 2022. Alba’s total assets as at 31 March 2023 amounted to BD 2,680.9 million (US$ 7,130 million) compared to BD 2,617.2 million (US$ 6,961 million) as at 31 December 2022 – an increase of 2%.
Alba’s net profit and profit was driven by lower LME prices (27% yoy) and insurance premiums (27% yoy).
Industry highlights
Global market demand is at a narrow point (-6% yoy)
Mixed macroeconomic dynamics – the downward post-COVID recovery in China, the resumption of limited capacity in Europe (due to lower gas prices) and the impact of banking unrest on US economic activity – continued to weigh on the aluminum market.
Economic activity in China has rebounded. However, it has not yet translated into a recovery in aluminum consumption (down 3% yoy)
Demand in the Middle East decreased by 6% yoy due to lower consumption in Bahrain (-9% yoy), UAE and Saudi Arabia respectively (-6% yoy)
Consumption in the US and Europe is losing momentum thanks to rising inflation and a potential banking crisis (down 7% yoy)
Global market supply flat thanks to new wave of discounts (+1% yoy)
Chinese production rose 3% year-on-year due to supply disruptions on the back of insufficient hydropower
Middle East supply declined -1% yoy (+1% yoy in Bahrain and -7% yoy in Saudi Arabia)
Weak mood in Europe with 25% of its smelting operating capacity shut down – Production down 7% YoY due to limited capacity restart at smelters
Global market surplus with China (+1 million metric tons) and without China (+0.05 million metric tons)
LME price and premiums
Market uncertainty sent LME prices down – $2,399 per ton in Q1 2023 – down 27% year-on-year [lowest: US$2,232/t on 17 & 22 March 2023 and highest: US$2,636/t on 18 January 2023]
LME inventories remain low at approximately 0.5 million metric tons (down 19% YoY)
Premium rates moved to different cadences: MJP declined while US Midwest and DDP Rotterdam improved
ALBA ESG Highlights
The Solar Farm project has been awarded to Advanced United Systems for the installation of photovoltaic (PV) solar panels on an area of more than 37,000 square meters with a capacity of more than 6 megawatts (MW) [aim to reduce 189,794,000 Kg of CO2 over 25-year span
Alba secures BBK’s sustainable financing Loan (BD1.6 million) for its Solar Farm Project
CEO unveiled the Company’s 2023 Objectives during the Annual Majlis: 1) Safety is Our Operating License 2) Al Hassalah Top Up 3) Be Ready to Take off Safely and 4) Don’t Limit Yourself
Alba has commissioned the ‘Food Waste Composter’ in line with its objective to address SDG 12 — Responsible Consumption and Production. This Composter has the capacity to treat around 125 Kg per day of food waste and produce nutrients-rich compost
Alba’s green and sustainable initiatives make impact — 12,000 trees planted since 2021
Recipient of the 2023 International Safety Award with Merit from the British Safety Council
Alba re-launches its Code of Conduct and emphasises on its Core Values
8 million safe working hours without LTI achieved on 06 March 2023
Block 4 Project: Procurement and Foundation Works for Main Equipment Completed
Alba Major Operational Highlights
Sales’ volume topped 359,677 metric tonnes (MT), up by 2% YoY while Production reached 398,252 MT, up by 2% YoY
Value Added Sales averaged 64% of the total shipments, almost flat [VAP: 230,491 MT in Q1’23 versus 230,467 in Q1’22]
Hassala sustainability achieved savings in 2023
The Forced Cooling Network (FCN) project was commissioned in Worklines 4 and 5, enabling the company to increase its production capacity by c. 17,000 metric tons annually
Alba’s ‘Only Arab on the List’ CEO named to National Safety Council (NSC) ‘CEOs to Get It’ list of 2023
Alba held the second edition of the “I am unique, I am creative” exhibition, which witnessed the participation of more than 50 employees
People’s Company: 7 national employees honored by Alba for their inspiring efforts during 2022
Mixed Macroeconomic Outlook and Fragile Market Fundamentals
Market uncertainty will continue to flood the aluminum market and LME prices
Smelter cuts in Europe are likely to keep the market in deficit in 2023. The eurozone economy will be challenged by weak manufacturing activities and rising inflation.
Global premium remains uncertain: supply constraints will support European premiums while weak market sentiment will choke off premiums in the US
LME price ranges from $2,200/ton – $2,300/ton
2023 ALBA PRIORITIES
Continue our safety journey by adhering to “Safety is our license to operate”
More sustainable value across our value chain and in line with Bahrain’s goals of ‘Net Zero Emissions’ by 2060
Increase net final production through Forced Cooling Network (FCN) (above 1,600,111 metric tons) and maintain Hassala savings with Hassala packaging
Examine potential exploration and production opportunities to secure 1/3 of alumina requirements
Leverage the Aluminum Stewardship Initiative (ASI) and Ecovadis certifications to penetrate new markets and amplify VAP sales
Advance with PS5 Block 4 and Solar Farm to raise our efficiency
Acceleration of the Bechtel feasibility study for the Line 7 smelter
Commenting on Alba’s financial performance for the first quarter ending 31st March 2023, Alba’s Chairman of the Board of Directors, Shaikh Daij Bin Salman Bin Daij Al Khalifa, stated:
“Despite the drop in LME prices and weak investor confidence, we were able to navigate the first quarter of 2023 by achieving exceptional performance both operationally and financially.
As we journey amid market challenges, we remain committed to implementing our strategic priorities – advancing the feasibility study for Line 7 and accelerating construction of the 5 Block 4 power plant – in line with the ESG roadmap. “
Adding to this, Alba’s Chief Executive Officer, Ali Al Baqali, said: “Against this downward economic backdrop, we remain focused on what we can truly control: safety, efficient operations and a lean cost structure as we collectively navigate our team – employees and contractors – of the waves.” to improve what we do.”
Alba’s management will hold a conference call on Wednesday 10 May 2023 at 11:30 am Bahrain time to discuss the company’s financial and operational performance for the first quarter of 2023 as well as setting the company’s priorities for 2023 as it charts its ESG journey.
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