Qamco reports net profit of QR835 million for 2021

Tribune News Network Doha Qatar Aluminium Manufacturing Company (Qamco), a 50 percent joint venture partner in Qatar Aluminum Limited (Qatalum or JV), on ...

Tribune News NetworkDoha Qatar Aluminium Manufacturing Company (Qamco), a 50 percent joint venture partner in Qatar Aluminum Limited (Qatalum or JV), on Thursday announced that the company reported a net profit of QR835 million for 2021, as compared to QR95 million for last year, with an earnings per share (EPS) of QR 0.15 versus QR 0.017 for last year. Commenting on the financial and operational performance for 2021, Qamco Chairman Abdulrahman Ahmad Al Shaibi said, “The main highlight of 2021 was a sequential macroeconomic recovery leading to strong price trajectories for primary aluminium, operational excellence along with good business management in the continuing COVID-19 situation, which resulted in an improved set of financial results since Qamco’s incorporation. While macroeconomic sentiments remained positive, we continued to focus on operational excellence, safety, flexibility and sustainability. Our firm belief and commitment to HSE has successfully positioned our JV to meet our health, environmental and social responsibility targets. Going forward, our competitive strengths coupled with our operational excellence would position us better for our long-term goals.”Prices of aluminium continue to show strength on the back of renewed global demand, with sectors such as construction and automotive industries witnessing growth, as global economies sequentially recovered linked to market reopening and accelerated GDP growth. Aluminium being a key input for electric vehicles (EVs), wind turbines and solar power, brings an additional layer of long-term demand for primary aluminium.As the power crisis in major markets became more acute coupled with aggressive decarbonisation linked policy cuts has affected aluminium capacities aiding accelerated inventory depletion. On an overall basis, while demand remained buoyant with limited supply, primary aluminium prices reached multi-year high and led to improved margins for low-cost producers.Share of revenue from the JV increased by 42 percent to reach QR3,118 million as compared to QR2,197 million for last year. EBITDA increased by 106 percent and reached QR1,374 million as compared to QR667 million for last year.Qamco’s improved financial results in comparison to last year were largely attributed to an overall growth in average realized selling prices which increased by 42 percent during 2021 versus last year, and contributed QR 932 million positively towards the current year’s net earnings in comparison to last year. Production activity remained stable with volumes witnessing a marginal increase of 1 percent during the year. Sales volumes marginally declined by 0.4 percent versus last year reflecting the timing of shipment to various destinations. Qamco’s JV remained successful in realizing higher production and sales of VAP in comparison to last year. This strategic production shift, since the latter part of last year, has positively supported the evolution of EBITDA margins for the JV. JV’s cost of goods sold for the current year was higher compared to last year, mainly on account of higher raw material costs, offset by favourable inventory movements and cost optimization initiatives. On an overall basis, the increase in the cost of goods sold contributed QR179 million negatively to Qamco’s net profits for the current year versus last year.Finance cost for 2021 witnessed a decline of 32 percent against last year, on account of the decline in interest rates and the absence of an unamortized portion of financing cost being written-off last year. The decline in finance cost contributed QR33 million positively to Qamco’s net earnings for the current year versus last year.Compared to the third quarter of 2021, the share of JV’s revenue improved by 28 percent, while Qamco’s net profits improved by 34 percent. The key contributor towards this growth was continued growth in average selling prices, on the back of supportive macroeconomic trends which echoed from the previous quarters. Average realised selling prices increased by 11 percent during the fourth quarter of 2021 against the third quarter of 2021. Sales volumes significantly increased by 16 percent against the third quarter of 2021, as more sales of extrusion and standard ingots were made during the quarter in line with the market demand.Qamco’s financial position continued to remain robust with cash and bank balances for 2021 reaching QR1.5 billion. Qamco’s JV generated share of operating cash flows of QR917 million, with a share of free cash flows of QR693 million.Qamco’s JV continues to maintain efficiency and cost competitiveness in terms of its production and operations. Capex projects were conducted as planned for the year, and in line with the operational requirements. These Capex programmes will support JV’s drive for operational efficiency and reduce carbon footprints. After reviewing the current year’s robust financial performance, with the present and forecasted liquidity position, and considering current and future macroeconomic conditions, business outlook, Capex, long term loan repayment plan of the company, the board of directors proposed a total annual dividend distribution of QR 446 million for the year ended 31 December 2021, representing a payout ratio of 53 percent of current year’s net earnings. A dividend of QR0.08 per share represents 8 percent of par value resulting in a dividend yield of 4.4 percent on the closing share price as ofDecember 31, 2021.