Alba Discloses its Financial Results for the Second Quarter and H1 of 2020
July 26, 2020
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Q2 & H1 2020 Financial Performance
Q2 2020 Industry Highlights
World consumption up by 5% year-on-year (YoY) while world production up by 7% YoY. Asian demand rose by 7% YoY supported by the Chinese consumption (9% YoY). MENA demand remains strong (6% YoY) driven by infrastructure spending in Saudi Arabia and Qatar. Prospects for the demand in North America continues to be good (3% YoY) due to the growth in the transport and construction sectors. Europe consumption remains stable (1% YoY) and is mainly denominated by the transport sector.
With regards to the First Half of 2020, Alba has reported a Loss of BD10.6 million (US$28.3 million), down by 44% YoY versus a Loss of BD19.1 million (US$50.9 million) for the same period in 2019. For the First Half of 2020, Alba reported Basic and Diluted Loss per Share of fils 8 versus Basic and Diluted Loss per Share of fils 14 for the same period in 2019. Alba’s Total Comprehensive Loss for H1 2020 was BD19.8 million (US$52.7 million), up by 4% YoY, compared to a Total Comprehensive Loss of BD19.1million (US$50.9 million) in H1 2019. Gross Profit for the First Half months of 2020 was BD55.2 million (US$146.8 million) versus BD16.2 million (US$43.2 million) in H1 2019 – up by 241% YoY.
Total Equity as at 30 June 2020 stood at BD1,057.1 million (US$ 2,811.5 million), down by 2%, versus BD1,078.6 million (US$2,868.6 million) as at 31 December 2019. Alba’s Total Assets as at 30 June 2020 topped BD2,380.7 million (US$6,331.7 million) versus BD2,420.2 million (US$6,436.8 million) as at 31 December 2019 - down by 2%.
With regards to the Revenue from Contracts with Customers in the second quarter of 2020, Alba generated BD244 million (US$649 million) versus BD245 million (US$651.8 million) in Q2 2019 - down by 0.4% YoY. For the First Half of 2020, total Revenue from Contracts with Customers reached BD519.9 million (US$1,382.9 million), up by 16% YoY, compared to BD448.6 million (US$1,193 million) for the same period in 2019.
Alba’s top-line was driven in the second quarter of 2020 by higher metal Sales’ volume thanks to Line 6 and impacted by lower LME price [down by 17% Year-over-Year (US$ 1,494/t in Q2 2020 versus US$ 1,793/t in Q2 2019)] while the bottom-line was impacted by higher depreciation and financial charges.
Alba Safety Highlights amidst COVID-19
The global spread of COVID-19 pandemic has disrupted the world’s economy. Governments’ strategies have been focused to contain the spread of COVID-19 from restricting travels to closing public services and limiting industrial activity. Commodities have taken the hardest hit and Aluminium supply-chain is not an exception.
World Consumption down by 9% Year-over-Year.
World ex-China has seen the largest-ever decline in Aluminium consumption [a drop of 28% YoY].
COVID-19 pandemic takes its toll on Aluminium demand in major markets: a drop of 35% in US, 30% in Europe & 22% in MENA.
Chinese economy has been recovering from the pandemic-driven shutdown thanks to the government’s stimulus measures which has led to 5% YoY growth in Aluminium demand [mainly via a rebound in construction and auto sectors].
Global Production witnessed a modest growth of 1% YoY. Primary Aluminium production in MENA continues - up by 25% YoY [mainly on the back of Alba’s Line 6 metal]. US manufacturing continues with production in North America up by 5% YoY. Better Shanghai Futures Exchange (SHFE) prices has led the Chinese supply to grow by 2% YoY. Europe supply down by 3% YoY due to COVID-19 disruptions to the Aluminium downstream. This has led the world market to be in surplus with China (+445Kt) and (+1,622Kt) without China.
LME inventories at ~1.6 million MT as of June-end (up by 66% YoY). LME-Cash averaged US$1,494/t (down by 17% YoY) and the Physical premium prices continue to be under downward pressure.
Q2 2020 Alba Highlights
- Ongoing liaison with COVID-19 Bahrain National Team to ensure our People’s Safety - Employees and Contractors.
- Remote work from home continues for most of office/admin employees (men & women).
- Adoption of social distancing & adjusting shifts’ schedule to minimize exposure risk.
- Restricting travels and embracing virtual meetings in-house and with external visitors.
2020 Alba Priorities
- Achieved on 29 June 2020: 23 million working-hours w/o LTIs for the first time in Alba’s commercial operations.
- 7-year winning streak with Gold Medal Health & Safety Award from the Royal Society for the Prevention of Accidents (RoSPA).
- Alba was honoured with British Safety Council’s International Safety Award with Merit – 2020.
- Successful set-up of the Fish Farm at Alba Calciner & Marine Operations.
- Sales’ volume topped 390,750 metric tonnes (MT) - up by 25% YoY while Production reached 378,558 MT - up by 24% YoY.
- Value Added Sales averaged 34% of the total shipments.
- Titan – Phase IV achieved savings were US$74 million against 2020 Target of US$100 million.
- Release of 2019 Sustainability Report (4th edition).
- Spent Pot Lining (SPL) Treatment Plant in progress (overall progress exceeded 21%).
- Continued Focus on ‘Safety Globe’ Initiative. Keep our People (Employees & Contractors) Safe Amidst Novel COVID-19.
- To achieve 2020 Production Target of 1,540,000 MT.
- Deliver on Project Titan - Phase IV [Projected Savings of US$ 100 Million by 2020-end].
- Screen for Upstream Opportunities to Secure Alumina requirements.
- Obtain Value-Added Sales’ Qualification with Aluminium Stewardship Initiative (ASI) and Ecovadis certifications.
- Complete SPL Treatment Plant and Port Upgrade as per Timeline.
Commenting on Alba’s financial performance for the second quarter of 2020, the Chairman of Alba’s Board of Directors, Shaikh Daij Bin Salman Bin Daij Al Khalifa stated:
“As COVID-19 unfolds, we continue to focus on adapting to the new life norm and keeping our people safe as we navigate together through this crisis.
Despite the challenging market conditions, we are unlocking our strength as we aim to close 2020 by meeting our Production Target of 1,540,000 metric tonnes.”
Adding further, Alba’s Chief Executive Officer, Ali Al Baqali said:
“Today, the world is going through radical transformation and the Aluminium industry is not an exception. Despite the odds, we have been able to maintain a stable performance by delivering on our commitments.
In the face of this crisis, we choose to get better by capitalising on our Safety culture and operational resilience which has led us to achieve more than 24 million safe working-hours without LTI as of to-date.”
Alba Management will hold a conference call on Monday 27 July 2020 to discuss Alba's financial and operational performance for Q2 2020 as well as outline the Company's priorities for the remainder of this year.