On 28th April 2021, Qatar Aluminium Manufacturing Company (Qamco) posted a net profit of QR124 million for the first quarter (Q1 2021). This is considered as a record increase ever in the history of organization for quarterly performance as it crossed over 1000% compared to QR11 million Y-o-Y.
Earnings per share (EPS) rose at QR0.022 compared to QR0.002 for Q1 2020. Qamco’s enhanced financial result during the period was driven by growth in global aluminium prices on the back of improved macroeconomic dynamics.
The overall growth in average realized selling prices increased by 15% in the first quarter against the same period in 2020 which contributed QR83 million positively to the net profits in Q1 2021 compared to the same period last year.
QAMCO, a 50% shareholder in Qatalum also reported that the share of joint venture’s (JV) revenue increased by 13% to reach QR639 million compared to QR565 million in Q1 2020.
EBITDA also increased by 52% to QR252 million in Q1 2021 compared to QR166m during the same period in 2020. As the later part of 2020 reflected some signs of recovery in the global market, the aluminium industry also captured the pace. Construction and automotive sectors witnessed growth, and a renewed global demand for primary aluminium was observed, whereas the supply-side stood dull.
All of these aspects converted into a subsequent growth in primary aluminium prices and improved margins.
The financial position of Qamco pursued to remain enterprising with the liquidity position at the end of 31st March reaching QR669 million in form of cash and bank balances. During the Q1, Qamco’s JV generated a positive share of operating cash flows of QR180 million, with a share of free cash flows of QR133 million.
On the contrary, the production levels remained even; sales volumes marginally dropped by 1% and contributed QR9 million negatively to net profits for the first quarter against Q1 2020.
Despite the drop in sales volumes than last year, Qamco’s JV was lucrative in selling 100% of value-added products (VAP) with no sales of standard ingots during the period. The shift from sales of standard ingots to VAP supported the overall evolution of EBIDTA margins.
The cost of goods sold for Q1 2021 remained lower compared to the same period last year, primarily on account of shrink in raw material costs, and cost optimization initiatives which derived in savings in manpower costs.
Comprehensively, the plunge in the cost of goods sold contributed QR20 million positively to the net profits for the first quarter. Furthermore, due to an overall fall in interest rates, JV’s finance costs for the financial period also declined by 57% against Q1 2020 and contributed QR24m positively to Qamco’s net earnings for the first quarter.
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