(MENAFN- The Peninsula) The Peninsula
Doha: Qatar Aluminium Manufacturing Company (QAMCO), a 50 percent joint venture partner in Qatar Aluminium Company (Qatalum), yesterday reported a 112.15 percent rise in net profit to QR611m for the six-month period ended June 30, 2022, from QR288m during the same period last year. This was QAMCO's highest half-yearly net profit since incorporation after benefitting from constructive macroeconomic drivers. The company has also posted an earnings per share (EPS) of QR0.11.
QAMCO JV's maximised sales of value-added products (VAP) also supported profitability margins, while QAMCO's share of revenue from the JV amounted to QR2.11bn during the first half of the year.
QAMCO's share of EBITDA from the JV stood at QR883m, with an EBTIDA margin of 42 percent for the first half of 2022.
The company's closing cash balance (including share of cash in QAMCO's JV) stood at QR1.3bn.
Macroeconomic environment remained uneven during the first half of 2022, where demand for primary aluminium continue to remain firm across key aluminium intensive sectors like automobiles (especially electric vehicles), construction, renewable energy and packaging. However, China's recent COVID-linked lockdowns has impacted demand for aluminium in the short-term.
On the other hand, supply remained in deficit, given exorbitant energy prices which challenged smelting capacitates and led to widening of inventory deficits. Trade disengagement from Russia amid geo-political tensions, also created uncertainty in the commodity markets.
On an overall basis, aluminium prices demonstrated essentially bullish trends during 1Q-22 amid persistent constructive demand and supply shortages. However, during Q2-22, LME prices softened on account of uncertainties over recessionary fears and limited demand.
QAMCO recorded a net profit of QR611m for 1H-22, a 112.15 percent increase compared to QR288m for 1H-21, with earnings per share (EPS) of QR0.11 for 1H-22 versus QR0.052 for 1H-21. Share of JV's revenue increased by 56 percent to reach QR2.106bn as compared to QR1.353bn for 1H-21. EBITDA increased by 58 percent and reached QR883m for 1H-22 in comparison to QR558m for 1H-21.
QAMCO's improved financial results for 1H-22 versus 1H-21, were largely attributed to an overall growth in average realised selling prices in comparison to 1H-21. Average realised selling price witnessed an increase by 54 percent during 1H-22 versus 1H-21 and contributed QR738m positively to the net profit for six-month period ended June 30, 2022 as compared to the same period last year.
Production and sales volume levels marginally increased by 1 percent during the period versus 1H-21. QAMCO's JV was successful maximising production of value-added products (VAP) with minimal sales of standard ingots were made during current period. Higher premiums were realised during 1H-22, mainly linked to better market sentiments prevailing during the first six months of the year.
Operating cost for 1H-22 remained higher versus 1H-21, mainly on account higher raw material costs, partially offset by favourable inventory movements. On overall basis, the increase in operating cost contributed QR379m negatively to the net profits for 1H-22 versus 1H-21. Due to the overall increase in interest rates globally, JV's finance costs for 1H-22 also increased by 12 percent versus 1H-21 and contributed QR4m negatively to QAMCO's net earnings.
Compared to 1Q-22, share of JV's revenue increased by 22 percent, while QAMCO's net profits improved by 55 percent. A key contributor towards this growth was the higher selling prices realised during 2Q-22 versus 1Q-22, which increased by 17 percent on quarter-on-quarter basis. Also, sales volume increased by 4 percent, positively affecting the overall financial performance on a quarter-on-quarter basis. On overall basis, higher realised selling prices and increased sales volumes led to 22 percent growth in QAMCO JV's topline for 2Q-22 in comparison to 1Q-22.
Cash and bank balances includes proportionate share of cash and bank balances of the joint venture and excludes restrictive cash balances.
QAMCO's financial position continued to remain robust with the liquidity position at the end of June 30, 2022 reaching QR1.332bn in form of cash and bank balances (including proportionate share of cash and bank balances of the joint venture). During 1H-22, QAMCO's JV generated share of operating cash flows of QR451m, with a share of free cash flows of QR307m.
QAMCO's JV continues to maintain high efficiency and cost competitiveness in terms of its production and operations. Health and safety measures continue to remain a priority to ensure reliability of assets, while achieving operational excellence. CAPEX projects were conducted as planned and in line with the operational requirements. These CAPEX programs will support JV's drive for operational efficiency, while reducing carbon footprints.
QAMCO will host an IR earnings call with investors to discuss its 1H-22 results, business outlook and other matters, today at 1:30pm Doha time. 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.
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