Qatar Aluminium Manufacturing Company (Qamco), a 50 percent joint venture partner in Qatar Aluminum Limited (Qatalum), on Wednesday reported a net profit of QR240 million for the first quarter of 2022 with earnings per share (EPS) of QR 0.043.
Demand for primary aluminium continues to remain firm across key aluminium-intensive sectors like automobiles (especially electric vehicles), construction, renewable energy and packaging.
On the other hand, supply remained in deficit, given higher energy prices in Europe and dual policy measures by China, leading to a widening of inventory deficits. Moreover, with trade disengagement from Russia amid geo-political tensions, commodity markets are displaying clear signals of scarcity. On an overall basis, these supply-demand imbalances have led to persistently high-price trajectories for primary aluminium throughout the first three months of 2022.
QAMCO recorded a healthy financial performance for the first quarter of 2022 and reported a net profit of QR 240 million, as compared to QR124 million for the same period last year with EPS of QR0.043 against QR0.022 for the first quarter of 2021.
Share of revenue from the JV increased by 49 percent to reach QR950 million as compared to QR639 million for the first quarter of 2021. EBITDA increased by 38 percent and reached QR361 million as compared to QR262 million for the same period last year.
Qamco’s improved financial results in comparison to the first quarter of 2021 were largely attributed to overall growth in average realised selling prices that increased by 51 percent during the first quarter of 2022 against the first quarter of 2021, and contributed QR320 million positively towards the current period’s net earnings in comparison to the first quarter of 2021.
Production activity remained stable with volumes witnessing a marginal increase of 1 percent during the current period. Sales volumes marginally declined by 1 percent versus last year, reflecting timings of shipment to various destinations. Qamco’s JV remained successful in realizing higher premiums linked to better market sentiments prevailed during the first quarter of 2022.
JV’s cost of goods sold for the first quarter of 2022 was higher compared to the first quarter of 2021, mainly on account of higher raw material costs, offset by favourable inventory movements and lower impairment provisions.
On an overall basis, the increase in the cost of goods sold contributed QR 183 million negatively towards Qamco’s net profits for the first quarter of 2022 against the first quarter of 2021.
Compared to the fourth quarter of 2021, the share of JV’s revenue decreased by 4 percent, while Qamco’s net profits declined by 23 percent. A key contributor to this decrease was mainly linked to the increase in key raw materials costs.
Also, the decline in sales volume by 11 percent affected overall financial performance on a quarter-on-quarter basis. The decline in sales volumes was mainly due to certain shipments in transit carried over from the third quarter of 2021 being delivered during the fourth quarter of 2021, which significantly increased the sales volumes for the fourth quarter of 2021 in comparison to any other quarter.
On the contrary, average selling prices increased by 7 percent and partially offset the aforementioned downsides. Growth in selling prices was mainly linked to persistent constructive macroeconomic trends echoed from the previous year. Also, geo-political tensions amid the Russia-Ukraine war have created an additional layer of supply-side challenges to the aluminium markets.
Qamco’s financial position continued to remain robust with cash and bank balances as of the end of March 2022 reaching QR 1.2 billion. Qamco’s share of operating cash flows generated by the JV amounted to QR219 million for the first quarter of 2022, with a share of free cash flows amounting to QR148 million.
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 the 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.