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Qatar Aluminium Manufacturing Company (Qamco), a 50 percent joint venture partner in Qatar Aluminium Company (Qatalum), on Tuesday reported a net profit of QR237 million in the first six months of 2024, with an earnings per share (EPS) of QR0.042.
The macroeconomic environment for the overall aluminium market started to stabilise during second quarter of 2024 after being volatile for most of 2023 and first quarter of 2024. Several factors led to challenging supply-demand dynamics of primary aluminium which resulted in volatilities in prices during the period.
This included tightened monetary policies, regional geo-political tensions in the Red Sea and weakened consumer demand stemming from relatively high inflation and interest rates.
However, the aluminum industry remained sturdy on the back of gradual global economy recovery. Moreover, US and UK restrictions on trading Russian metals continue to impact supply and demand dynamics prevailing in aluminum market.
Qamco reported a net profit of QR 237 million in the first half of 2024, compared to QR240 million for the same period of last year, with an earnings per share (EPS) of QR 0.042 compared to QR0.043 for the first half of 2023.
Share of JV’s revenue reached QR1.5 billion in the first half of 2024, compared to QR 1.6 billion in the same period last year. EBITDA marginally declined 1 percent YoY and reached QR495 million in the first half of 2024.
However, EBITDA margin stood steady at 33 percent in the first half of 2024 compared to 31 percent in the first halfof 2023. Qamco’s financial results in the first half of 2024 was overshadowed by an overall decline in average realised selling prices during the period compared to the same period of last year, which was partially offset by improved operating costs and increase in sales volumes.
Average realised selling price witnessed a decline of 9 percent compared to last year reaching $2,485/MT in the first half of 2024 amid macroeconomic headwinds. This had an impact of QR154 million to the net profit in the first half of 2024 compared to the same period of last year. Additionally, financial results were also impacted by increase in finance costs due to higherinterest rates.
Results were partially offset by improved sales volumes, which increased by 4 percent mainly driven by improved demand for both foundry alloys and extrusion ingots compared to the same period of last year. Increase in sales volumes contributed QR 56 million positively in the first half of 2024 results, compared to the first half of 2023, despite challenges faced in shipments disruptions in the Red Sea that caused various delays during the first quarter of 2024.
Furthermore, cost of goods sold for the current period declined compared to the first half of 2023, mainly owing to lower raw material costs.
On overall basis, the decline in cost of goods sold contributed QR 84 million positively to the net profit in the first half of 2024 compared to the same period of last year.
Production levels slightly inched higher with an increase of 1 percent in production volumes in the first half of 2024 against the first half of 2023, on the back of stable current efficiency coupled with improved amperage.
Qamco’s net profit increased by 77 percent in the second quarter of 2024 compared to previous quarter reaching QR151 million, mainly driven by higher sales volume (up 27 percent), coupled with improved average selling prices realised in the second quarter of 2024 (up 4 p[ercent).
Increase in quarterly sales volume can be attributed to improved demand for both foundry alloys and extrusion ingots during the quarter, stemming from gradual recovery of aluminum market. Increase in sales volumes contributed QR171 million positively to the bottom-line profitability in the second quarter of 2024, compared to the previous quarter. Moreover, selling prices witnessed an upward push in the second quarter of 2024, compared to the previous quarter.
Qamco’s profitability increased marginally by 3 percent in the second quarter of 2024 compared to the same quarter of last year, mainly driven by improved sales volumes and reduced operating costs in the second quarter of 2024, which offset the impact of overall decline in average selling prices in the second quarter of 2024, in comparison to prices in the second quarter of 2023.
Qamco’s financial position continued to remain robust with liquidity position reaching QR2 billion in cash and bank balances as of 30 June 2024 (including proportionate share of cash and bank balances of the joint venture) after paying 2023 dividend of QR391 million during the period. Qamco’s JV generated share of operating cash flows of QR 308 million during the period, with share of free cash flows amounting to QR 192 million.
Qamco’s JV has continuously demonstrated ongoing commitment to maintaining high efficiency and cost competitiveness in its production and operations. The prioritisation of health and safety measures underscores its dedication to ensuring both the well-being of its workforce and the reliability, and integrity of its assets.
Moreover, executing CAPEX projects as planned and in alignment with operational requirements showcases strategic foresight and resource management. Through its focus on operational excellence, health and safety, and strategic investments, Qamco’s JV is well-positioned for sustained success in its industry.
The board of directors have decided a total interim cash dividend distribution of QR167 million equivalent to QR0.03 per share representing 3 percent of nominal share value for the period ended 30 June 2024.
According to relevant regulations, the interim cash dividends will be paid to shareholders as at the close of trading on 14th August 2024. Edaa will handle the payment of interim dividends in accordance with applicable rules and regulations.
Qamco will host an IR earnings call with investors to discuss its results for the first half of 2024, business outlook and other matters, on August 11, 2024. 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.