EGA reports lower earnings in 'challenging' year for aluminium sector
Prices fell during the year despite a hike in alumina costs during the first half of 2019
Emirates Global Aluminium reported a 43 per cent decline in adjusted earnings as a materials shortage meant a “challenging year for the global aluminium industry”, according to its chief executive.
Adjusted earnings before interest, tax, depreciation and amortisation fell to Dh2.5 billion in 2019, compared to Dh4.4bn a year earlier. Revenue also fell by 12 per cent to Dh20.5bn.
Although global prices for aluminium fell, the cost of key raw materials including alumina spiked during the first half of the year as the curtailment of activity at a major refinery in Brazil caused a global supply shortage.
EGA, the biggest industrial company in the UAE outside the oil and gas sector, took action “to reduce our costs, improve our operational efficiency, and maximise cash generation”, chief executive Abdulnasser Bin Kalban said.
“Market conditions last year further validated our strategy of controlling our own supply of bauxite and alumina and reducing our exposure to volatile raw materials prices. During 2019 we completed construction and made excellent production ramp-up progress at both our strategic upstream growth projects.”
The first of its upstream projects to begin was the Taweelah alumina refinery plant, which takes bauxite and refines it into alumina. It began in April last year and by the end of 2019 had produced 1.1 million tonnes
The second was its bauxite mining subsidiary, Guinea Alumina Corporation, which mined a total of 1.7 million tonnes last year and began bauxite exports in August.
EGA sold 2.6 million tonnes of cast metal in total in 2019, which was lower than the 2.64 million tonnes in 2018.
It finished the year with more than 1,100 UAE nationals working at EGA, giving the company its highest ever Emiratisation rate of 39.8 per cent of ‘in-focus’ roles.
Aluminium prices have slumped to $1,507 (Dh5,530) per ton from a recent peak of over $2,500 per ton in April last year. Although demand remains weak, futures prices on the London Metals Exchange indicate some respite is likely later this year, with contracts for delivery in December currently trading at $1,660 per ton.
Emirates Global Aluminium is a joint venture between Abu Dhabi's Mubadala Investment Company and Investment Corporation of Dubai.
Updated: March 26, 2020 04:21 PM