Emirates Global Aluminium, the largest industrial company in the United Arab Emirates outside oil and gas and the world’s largest ‘premium aluminium’ producer, has reported net income of AED 1.2 billion ($325 million) for 2018.
This is a decrease of 64 per cent compared to 2017 mainly due to higher raw material prices and despite strong operational performance including record production amid challenging market conditions.
EGA’s revenue increased to AED 23.5 billion ($6.4 billion) in 2018, compared to AED 20.5 billion ($5.6 billion) in 2017.
The increase in revenue was driven by higher sales volumes, higher benchmark price and product premiums and an increase in value-added product sales by 161 thousand tonnes to a record 2.3 million tonnes.
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortisation (adjusted EBITDA) stood at AED 4.4 billion ($1.2 billion), a decrease of 35 per cent from AED 6.6 billion ($1.8 billion) in 2017.
EGA’s adjusted EBITDA margin for 2018 was 18 per cent (32 per cent in 2017). The reduction in adjusted EBITDA was due to higher raw material prices in 2018, mainly alumina where EGA procures 100 per cent of its requirement from third party suppliers.
EGA’s exposure to raw material market prices will be reduced significantly once EGA’s alumina refinery in Abu Dhabi and bauxite mining project in the Republic of Guinea start-up and reach full production.
Al Taweelah alumina refinery is expected to meet some 40 per cent of EGA’s alumina needs once fully ramped-up. The Guinea Alumina Corporation bauxite mining project is expected to produce 12 million tonnes per year of the ore from which aluminium is derived.
Both projects are set to begin production this year.
Just over 10 per cent EGA’s production was supplied to customers in the UAE, serving the needs of the UAE’s downstream fabrication sector.
EGA sold 275,000 tonnes of metal to customers in the UAE in 2018, compared to 268,000 tonnes in 2017. This included sales of hot liquid metal to customers located near EGA’s Al Taweelah smelter in Abu Dhabi.
EGA distributed AED 1.1 billion ($300 million) to its shareholders in 2018.
EGA recently closed a $6.5 billion corporate debt transaction, taking advantage of strong lending market conditions. This refinancing of EGA’s corporate debt optimises EGA’s capital structure, reducing the cost of debt, creating more flexibility for repayment, and aggregating debt at the EGA level.
Abdulla Kalban, EGA’s Managing Director and Chief Executive Officer, said: “The aluminium industry is going through a challenging period with higher prices for our raw materials and lower benchmark prices for finished metal.
“This is reflected in our financial performance for 2018, although EGA achieved record production and value-added product sales and continued our strong focus on cost control and operational efficiency.
“Our strategic upstream growth projects, which will significantly reduce our exposure to volatile raw material prices, are nearly complete and will both begin production this year.
“During 2018, two of our colleagues lost their lives in an industrial incident in Jebel Ali, which is unacceptable to everyone at EGA. We investigated this incident thoroughly and took strong action across our business to address all its root causes.”
Al Taweelah alumina refinery is in the final stages of commissioning and first alumina is expected during the first half of 2019. The project has a total budgeted project cost of approximately $3.3 billion.
Construction at GAC, EGA’s bauxite mining project in Guinea, is more than 85 per cent complete.
During 2018, EGA’s shareholders - Mubadala and Dubal Holding - also agreed to form a joint venture to develop a new power plant with a capacity of over 600 megawatts at EGA’s site in Jebel Ali.
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