EGA’s 2023 profit falls amid global aluminium price slump

Company remains bullish about long-term demand outlook for its low-carbon metal

Emirates Global Aluminium's revenue in 2023 fell about 15 per cent to Dh29.5 billion. Photo: EGA
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Emirates Global Aluminium, the UAE’s largest industrial company outside the oil and gas sector, reported a drop in 2023 profit as revenue declined after global aluminium prices fell from the decade-highs reached in 2022.

Net profit for the 12 months to the end of December fell to Dh3.4 billion ($937 million), from Dh7.4 billion recorded during the same period in the previous year, the company said in a statement on Tuesday.

Revenue during the reporting period fell about 15 per cent annually to Dh29.5 billion, "driven by lower global benchmark prices for aluminium," which was partly offset by EGA through increased production and sales volume, the company added.

EGA’s adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) reached Dh7.7 billion in 2023, compared to Dh12.4 billion the previous year.

Operational efficiency and costs controls enabled the company to “deliver competitive financial results compared to our global peers and record-equalling dividends for our shareholders", chief executive Abdulnasser bin Kalban said.

EGA paid Dh3.7 billion in dividends to shareholders last year, same as 2022.

Prices of commodities, including aluminium, rose sharply in 2022, driven by Russia's invasion of Ukraine, with global aluminium prices touching decade-high of $3,985 a tonne in March of that year before retreating to $2,080 in the following September.

In subsequent months, prices of the metal have remained under pressure amid weak demand. It was trading at $2,234 per tonne at 1.20pm UAE time at the London Metal Exchange (LME).

EGA said its average realised LME price for 2023 was $2,264 per tonne, compared to $2,715 per tonne the previous year.

“Global aluminium prices were lower than in 2022, amid a less robust economy. However, prices remained higher than historic annual averages for the eight years before the pandemic," Mr bin Kalban said.

“We believe the outlook for aluminium in the long term is very positive, because our metal is an essential material for the development of a more sustainable society.

"Global aluminium demand is expected to grow significantly over the coming decades, particularly for low carbon and recycled metal. EGA is well set to capitalise on these growth opportunities and further strengthen our position in the global aluminium industry.”

EGA, one of the world’s largest aluminium producers, has smelters in Abu Dhabi and Dubai, a refinery in Abu Dhabi and a bauxite mine in Guinea.

The industrial powerhouse is jointly owned by Abu Dhabi sovereign wealth fund Mubadala Investment Company and the Investment Corporation of Dubai.

EGA’s exports of bauxite from Guinea and production of alumina and hot metal in 2023 were the highest achieved by the company, it said.

It recorded total cast-metal sales of 2.75 million tonnes, up from 2.72 million in 2022, with UAE sales reaching 293,000 tonnes last year.

Total alumina production rose to record 2.48 million tonnes, from 2.43 million tonnes the previous year, while production of low-carbon CelestiAL solar aluminium grew from 57,000 tonnes to 66,000 tonnes, with BMW Group remaining its largest customer.

Last year, EGA began supplying aluminium made using solar power and recycled metal to BMW.

Exports of bauxite from its Guinea project increased to 14.1 million wet metric tonnes from 14 million the previous year, EGA said.

Hot metal production rose to 2.66 million tonnes from 2.65 million tonnes the previous year.

EGA supplied products to 423 customers in more than 50 countries in 2023, the company said.

“Over the past four years we have transformed our business, delivering $2.4 billion in cost and revenue improvements," said Ziad Fares, acting chief financial officer of EGA. "Over the same period, we have reduced our total debt burden by $3.3 billion while delivering healthy dividends to our shareholders."

During 2023, EGA said it prepaid Dh2.9 billion worth of corporate debt in addition to scheduled repayments at Guinea Alumina Corporation.

Its total debt at the end of the year stood at Dh16.6 billion, compared to Dh19.7 billion at the end of 2022.

Last month, EGA broke ground on its sustainable industrial data centres, paving the way for plans to power its operations with artificial intelligence.

The data centres at its smelters in Al Taweelah in Abu Dhabi and Jebel Ali in Dubai will be powered by 100 per cent renewable energy, help to increase data-processing capacity by 2,300 times and cut costs, it said at the time.

Updated: March 05, 2024, 12:05 PM