EGA delivers record first-half earnings in 2021 amid demand growth

Chief executive says company's performance will continue to improve, making it 'attractive' if shareholders proceed with an IPO

Emirates Global Aluminium EGA was formed from the 2013 merger of Dubai Aluminium and Emirates Aluminium. Photo: Mubadala

Emirates Global Aluminium, the UAE’s biggest industrial company outside the oil and gas sector, reported its strongest half-yearly results after its earnings more than doubled and profit rose amid higher demand for its products and the global economic recovery.

Adjusted earnings before interest, taxes, depreciation and amortisation, or Ebitda, for the six months to the end of June climbed to Dh3.49 billion ($950 million), a 111 per cent rise compared with the same period in 2020, the company said on Monday.

Net profit for the six months to the end of June climbed to Dh1.74bn, from a loss of Dh208m in the same period in 2020 at the height of the pandemic, which severely disrupted economic momentum.

The half-yearly net profit is also 166 per cent higher than the Dh653m reported at the end of the second half of 2020.

“Global demand for aluminium is high, especially after the great economic recovery post Covid-19 crisis,” Abdulnasser bin Kalban, chief executive of EGA, told The National.

The commitment of many governments around the world to build back better means the long-term outlook for the aluminium industry remains bright, he said.

"We are really excited and confident about the future of our metal because aluminium will play an important role in decarbonisation strategies for climate change."

Strong prices for aluminium, a high percentage of value-added products and record production at the company’s Al Taweelah alumina refinery and its Guinea Alumina Corporation, underpinned the return to profitability.

“I am confident that our performance will continue to improve, making EGA increasingly attractive should our shareholders decide to proceed with an initial public offering, which would be one of the UAE’s largest,” Mr Kalban said.

The global economy is set to grow by 6 per cent this year after contracting 3.3 per cent last year as countries loosen border restrictions and global trade bounces back, said the International Monetary Fund.

A commodity boom has boosted the prices of products such as steel, copper and aluminium. The benchmark price for aluminium on the London Metal Exchange averaged $2,245 a tonne in the first half of the year, compared with $1,592 a tonne in the same period a year earlier.

Aluminium prices had slumped to about $1,400 a tonne in April last year from a previous peak of more than $2,500 a tonne. Aluminium futures for October delivery are currently trading at $2,600 a tonne.

However, the aluminium industry is grappling with the rising cost of logistics and "we are working hard on [finding] a solution to global logistics challenges, which is a big issue for many industries", Mr Kalban said.

"We are looking forward to the rest of the year. We are positive, we are bullish about our industry and we are all excited about the next stage of our corporate journey."

EGA, which is jointly owned by Abu Dhabi’s strategic investment arm, Mubadala Investment Company, and the Investment Corporation of Dubai, said revenue in the first six months of the year climbed to Dh10.8bn, compared with Dh9bn in the same period of 2020.

Cash generated from operating activities for the reporting period also rose to Dh2.89bn, from Dh2.03bn in the first half of 2020, as the company increased its working capital.

EGA refinanced $5.5bn of corporate debt during the first six months, deleveraging $1bn. The company also managed to improve repayment terms to reduce costs and allow for “an optimal dividend policy in future years for shareholders”, it said.

"2020 was a pivot year for EGA," said EGA's chief financial officer Zouhir Regragui. "Now, we have turned our focus to strengthen the balance sheet and deleveraging."

The company, which has more than 442 long-term customers in 57 countries, sold 1.18 million tonnes of cast metal.

It sold 140,000 tonnes of cast metal to its customers in the UAE, up from 127,000 tonnes in the first six months of 2020, reflecting the strength of the UAE’s economic recovery, it said.

EGA’s Al Taweelah alumina refinery delivered a record 1.09 million tonnes of alumina, further improving on 1.04 million tonnes produced in the second half of the last year.

Its Guinea Alumina Corporation exported 5.85 million tonnes of bauxite ore, up from 5.47 million tonnes in the same period.