Manama, November 10 (BNA): Aluminum Bahrain B.S.C. (Alba) (index: ALBH), one of the world’s largest aluminum smelters, reported a profit of BD48 million ($127.6 million) for the third quarter of 2022, down 62% year-over-year (y-o-y), versus Profit of BD125.9 million (US$335 million) for the same period in 2021. The company reported basic and diluted earnings per share of 34 fils for the third quarter of 2022 against basic earnings and diluted earnings per share of 89 fils for the same period in 2021. Total comprehensive income for the third quarter of 2022 was BD58.2 million (US$154.8 million) compared to Total Comprehensive Income for the third quarter of 2021 of BD126.4 million (US$336.1 million) – down 54% YoY. Gross profit for the third quarter of 2022 was BD79 million (US$210.2 million) compared to BD157.4 million (US$418.5 million) for the same period in 2021 – a decrease of 49.8% YoY. In terms of revenue in the third quarter of 2022, Alba generated BD403.2 million ($1,072.3 million) versus BD388.9 million ($1034.2 million) in the third quarter of 2021 – an increase of 3.7% year-over-year.
For the nine months of 2022, Alba reported a profit of BD376.7 million (US$1001.9 million), an increase of 39.2% year-over-year, compared to a profit of BD270.7 million (US$720 million) for the same period in the year 2022. 2021. The company announced basic and diluted earnings per share of 266 fils for the nine months of 2022 compared to basic and diluted earnings per share of 191 fils for the same period in 2021. Alba’s total comprehensive income for the nine months of 2022 was BD 416.1. BD1 million (US$1,106.6 million), an increase of 51% YoY, compared to total comprehensive income of BD275.5 million (US$732.7 million) in the same period in 2021. Gross profit for the nine months of 2022 was BD465 million (US$1,236.8 million) compared to BD361.5 million (US$961.5 million) in the same period in 2021 – an increase of 28.6% YoY. In the nine months of 2022, Alba generated revenues of BD1,378.5 million ($3,666.2 million) versus BD1,061.5 million ($2,823.1 million) in the same period in 2021 – an increase of 29.9% on an annual basis.
Total shareholders’ equity on September 30, 2022 amounted to BD 1,783.7 million (US$ 4,743.9 million), an increase of 18.7%, compared to BD 1,503 million (US$ 3,997.4 million) as on December 31, 2021., 729.8 million (US$7,260.1 million) versus BD2,624.6 million (US$6,980.3 million) as of December 31, 2021 – an increase of 4%.
Alba’s top streak was driven by LME prices (down 11% y/y in Q3 2022 and up 19% y/y in the nine months of 2022) despite steady growth in sales volume in both periods while Final earnings were for the third and ninth quarters. Months of 2022 were driven by a higher streak and partly impacted by higher cost and distribution expenses.
Industry Highlights in the Third Quarter of 2022
Lower Demand: High Levels of Volatility and Uncertainty (+0.3% YoY)
After getting through the COVID-19 pandemic, the global economy is starting to face the possibility of a recession. The outbreak of war between Ukraine and Russia led to a sharp increase in energy prices with global inflation rising to unprecedented levels and interest rates rising sharply. All this affected the aluminum industry mainly in Europe and the United States as smelters reduced production on the back of higher energy prices and lower demand growth
Middle East: Demand up 8% YoY supported by higher consumption in UAE (+17% YoY) and Bahrain (+3% YoY)
US: Aluminum Demand Still Under Pressure (+2% YoY)
China: Consumption impacted by lockdowns and logistical challenges (+1% compared to last year). Sectors such as construction, packaging and consumer durables have suffered the most
Europe: slowing economic growth and rising inflation have shrunk aluminum demand (-8% y/y)
Global market supply +3% compared to last year
China ramped up production (up 6% y/y) after cutting supplies in 2021 and delaying production increases
Europe leads the world excluding China through production cuts due to the sharp rise in energy prices (8% year-on-year decline)
Supply in North America affected by the economic slowdown (down 5% YoY)
Middle East: Supply up 3% YoY led by higher production in UAE (+5% YoY)
Global market: surplus with China (+90 thousand tons) and without China (+ 152 thousand tons)
Prices for LME and Premia
LME cash averaged $2,354 per ton in Q3 2022 with LME stocks dropping to a record low of 330 kilotons (down 73% YoY)
Lower premiums due to weak demand and bearish market sentiment
Alba Major ESG Highlights in Q3 2022
Recipient of six major awards from the 2021 USA National Safety Council: Safety Leadership Award, Major Improvement Award, Exemplary Record Award, Professional Excellence Achievement Award, Milestone Award and Million Hours Award
Alba supported the Bahrain Environmental, Social and Corporate Governance Initiative “Forever Green” by sponsoring the Ras Sanad mangrove nursery project
To provide a level playing field for the female workforce, ALBA has introduced a leadership course specifically designed to enhance their leadership skills
Alba underscores its commitment to the development of Bahraini youth by supporting 70 students undergoing on-the-job training (OJT) programs across different careers at Alba.
31 million safe working hours without lost working time were achieved on September 24, 2022
To issue the sixth edition of Alba’s sustainability report (with quality assurance)
Alba’s Operational Highlights in the Third Quarter of 2022
Produce [Q3: 404,578 MT, up by 3% YoY; 9 Months: 1,192,171 MT, up by 2% YoY]
Sales volume [Q3: 366,292 metric tonnes (MT); 9 Months: 1,108,950 MT — flat growth in both periods]
value added sales [Q3: 67% versus 58% in Q3 2021; 9 Months: 67% versus 62% in 9 Months in 2021]
Starting the construction of the first concrete foundation for the 5 block 4 power plant project in addition to starting construction activities and other site works
Mitsubishi Power has obtained a Long Term Service Agreement (LTSA) to ensure efficient and reliable power supply
Short-term prospects for aluminum shrouded in uncertainty and weak market sentiment
The world economy has plunged into an extended period of stagflation with rising inflation, weak consumer demand and slowing industrial output growth. This will likely lead to a prolonged period of metal surpluses in the market.
Recession fear is growing in the wake of aggressive interest rate hikes in the US and Europe while the weak real estate sector continues to weigh on the Chinese economy.
Demand for sectors related to packaging and renewable energy is set to grow
Higher energy costs in Europe are likely to fuel production cuts while lower rainfall in Yunnan limits supply growth in China
Freight rates are expected to fall further amid the slowdown in global trade and as global supply chains show signs of improvement
Regional premiums set to fall amid concerns over metals demand
LME price ranges between $2000/tonne – $2100/ton for the remainder of 2022
2022 Alba’s Priorities
Implementation of the newly launched ESG roadmap in line with Bahrain’s targets for ‘net zero emissions’ by 2060
Embedding ESG in every aspect of our operations and operations as well as trading with various stakeholders and partners potential ESG initiatives to enhance sustainable value across our value chain
Exceeding 2022 production target of 1,560,000 metric tons and achieving Hassala savings target of US$100 million by the end of 2022
Keep checking potential exploration and production opportunities to secure 1/3 alumina requirements
Take advantage of the aluminum stewardship initiative and Ecovadis certifications to penetrate new markets and increase VAP sales despite challenges
Completion of the granting of the solar farm project
Progress in the Feasibility Study (FS) of Bechtel Line 7 by Q3 2023
Commenting on Alba’s good financial performance during the first nine months of 2022, Alba’s Chairman of the Board, Sheikh Daij bin Salman bin Daij Al Khalifa said:
“It only took 12 months to reach the $1 billion mark in our earnings ($1.002 billion, up 39% year-over-year). With this strong performance, we have set a new standard amidst market challenges. We are also more committed than ever to moving forward. In the proposed Seventh Line project and investing in expanding Alba’s production capacity to meet future market demand.
As we approach the 2022 closing, we remain optimistic about setting new precedents in our operational and financial performance.”
Alba CEO Ali Al Baqali added:
“Alba’s strong foundation, thanks to the Line 6 expansion project, has allowed us to not only address challenges but also unlock new possibilities in terms of doing more for less. With increasing uncertainty and volatility, we remain committed to excel in what we control best: safety, production and cost.” “
Alba’s management will hold a conference call on Monday, November 14, 2021 at 2 pm Bahrain time to discuss its financial and operational performance for the third quarter and nine months of 2022, outlining the company’s priorities for 2022 as well as exchanging insights on current market conditions and prospects. for the year 2022-2023.
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