Emirates Global Aluminium Reports Competitive Financial Performance in H1 2023

Emirates Global Aluminium Reports Competitive Financial Performance in H1 2023

Emirates Global Aluminium Reports Competitive Financial Performance in H1 2023

Emirates Global Aluminium (EGA) announced robust financial results for the first half of 2023, demonstrating resilience and strategic planning in the face of evolving market conditions.

In the first half of 2023, EGA reported adjusted Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) of AED 4.2 billion (US$1.1 billion), a notable achievement given the market’s moderation compared to the previous year’s significant volatility. This figure represents a decline from AED 7.6 billion (US$2.1 billion) in H1 2022.

The net profit for H1 2023 stood at AED 2.0 billion (US$533 million), a decrease from AED 5.9 billion (US$1.6 billion) in H1 2022. Likewise, revenue dropped to AED 14.8 billion (US$4 billion) from AED 18.3 billion (US$5 billion) in H1 2022.

Despite market fluctuations, EGA maintained a competitive edge, with its aluminium segment’s EBITDA margin at 27%, albeit down from 41% in H1 2022.

EGA continued its strategic financial moves by making an AED 2.9 billion (US$800 million) corporate debt pre-payment during H1 2023. This action aligns with EGA’s commitment to strengthening its balance sheet for future growth. To date, the company has pre-paid AED 9.4 billion (US$2.6 billion) since mid-2021, resulting in an outstanding corporate debt of AED 14.4 billion (US$3.9 billion) and GAC holding outstanding project financing of AED 2.3 billion (US$614 million). EGA’s net debt to adjusted EBITDA ratio reached 1.6x at the end of June 2023.

Operational Highlights of H1 2023

EGA’s commitment to safety was evident in its Total Recordable Injury Frequency rate of 1.55 per million hours worked, with just one Lost Time Injury during the period.

Sales of cast metal saw a 1% increase, reaching 1.32 million tonnes in H1 2023, compared to 1.31 million tonnes in H1 2022. Additionally, 11% of total metal sales were attributed to local UAE customers.

While sales of ‘premium aluminium’ decreased by 5%, accounting for 77% of total sales, EGA focused on optimizing EBITDA contribution through non-value-added product sales into global markets at strong premiums. This strategy allowed EGA to maintain or expand its market share in ‘premium aluminium.’

The Al Taweelah alumina refinery delivered 1.15 million tonnes of alumina to EGA’s smelters, ensuring a steady supply to meet 45% of the company’s total alumina needs during the period.

Notably, bauxite exports from Guinea increased by 6% to 6.87 million tonnes in H1 2023, demonstrating EGA’s commitment to securing essential raw materials.

Future Prospects

Abdulnasser Bin Kalban, CEO of EGA, expressed confidence in the company’s ability to maintain competitiveness in the second half of 2023 in a press release. He attributed this confidence to EGA’s ongoing efforts to maximize revenue, minimize costs, prioritize operational excellence, and strengthen partnerships with global customers.

“At EGA we aim to achieve performance that is competitive for our sector throughout the economic cycle. In the first half of 2023 that is what we did – delivering solid financial results even as market conditions moderated from the significant volatility of recent years, a testament to our resilience and strategic approach.

“I am confident we will continue to be competitive in the second half, as we benefit from our multi-year drive to maximise our revenue and minimise our costs, our focus on operational excellence, and our partnerships with our global customers,” he continued.

Zouhir Regragui, CFO of EGA, highlighted the company’s commitment to optimizing its balance sheet for future growth, emphasizing opportunities in primary production and business expansion in recycling. Regragui noted that EGA’s track record in strategic expansion, operational expertise, and financial strength positions it well within the industry to capitalize on these opportunities.

“Our continuing performance, recurring cost savings from our multi-year Najah transformation programme, and strong cash generation has enabled us to further optimise our balance sheet for future growth. Over the longer term, we see considerable opportunities both to grow our primary production and to develop our business in recycling. We are well-placed within our sector to capitalise on these opportunities due to our track record in strategic expansion, our operational expertise, and our financial strength.”