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Aluminium
for the world
INVESTOR RELATIONSPRESENTATION
Q2 2018
DISCLAIMER
2
This document has been prepared and issued by and is the sole responsibility of Aluminium Bahrain B.S.C. (the“Company”). The document is being supplied to you solely for your information and for use at the Company’s presentation.No information made available to you in connection with the presentation may be passed on, copied, reproduced, in wholeor in part, or otherwise disseminated, directly or indirectly, to any other person. This document and its contents aredirected only to the intended audience. It is being made on a confidential basis and is furnished to you solely for yourinformation. By accepting this material the recipient confirms that he or she is a relevant person. This document must notbe acted on or relied on by persons who are not relevant persons. Any investment activity to which this document relatesis available only to relevant persons and will be engaged in only with relevant persons. If you are not a relevant person youshould not attend the presentation and should immediately return any materials relating to it currently in your possession.Forward-looking statements speak only as at the date of this presentation and Aluminium Bahrain B.S.C. expresslydisclaims any obligations or undertaking to release any update of, or revisions to, any forward-looking statements in thispresentation. No statement in this presentation is intended to be a profit forecast. As a result, you are cautioned not toplace any undue reliance on such forward-looking statements. You should not base any behaviour in relation to financialinstruments related to the Company’s securities or any other securities and investments on such information until after it ismade publicly available by the Company or any of their respective advisers. Some of the information is still in draft formand has not been legally verified. The Company, its advisers and each of their respective members, directors, officers andemployees are under no obligation to update or keep current information contained in this presentation, to correct anyinaccuracies which may become apparent, or to publicly announce the result of any revision to the statements madeherein except where they would be required to do so under applicable law, and any opinions expressed in them are subjectto change without notice. No representation or warranty, express or implied, is given by the Company, its undertakings oraffiliates or directors, officers or any other person as to the fairness, accuracy or completeness of the information oropinions contained in this presentation and no liability whatsoever for any loss howsoever arising from any use of thispresentation or its contents otherwise arising in connection therewith is accepted by any such person in relation to suchinformation.
Aluminium
for the world
3
01IndustryHighlights
CONTENTS
02ALBAHighlights
03Q2 2018Results
04IndustryPerspectivesin 2018
052018ALBA Priorities
Aluminium
for the world
Aluminium
for the world
01INDUSTRY HIGHLIGHTS
1 Industry Highlights are based on CRU analysis
Industry Highlights - Q2 2018
World consumption up by 5% YoY
MENA demand surge by +9% YoY driven by major infrastructure spending in Saudi Arabia (+20% YoY)
Demand in Asia up by 6% YoY supported by Chinese consumption (+6% YoY) on the back of real-estate developments
Europe consumption up by 3% YoY due to strong demand across building, construction and transport sectors
North America demand up by 3% YoY driven by auto production (heavy-duty trucks)
Aluminium
for the world
Global Physical Demand Remain Healthy
5
Industry Highlights - Q2 2018
World production down by ~ 0.5% YoY
Asian supply almost flat & Chinese supply down by 2% YoY due to delays in smelters’ ramp-up
Production in North America dropped by 5% YoY due to outages in Warrick and Sebree smelters
World market in deficit with China (-1,425 Kt) & (-959 Kt) without China
Aluminium
for the world
Global Production Growth Flat
6
Industry Highlights - Q2 2018
Aluminium
for the world
LME & Premiums
7
Q2 2018 cash-average was $2,259/t with LME ranging between $1,967/t on April 6 and $2,602/t on April 19
LME inventories at 1.1 million metric tonnes in June
Physical premium prices ($/t) up driven by tight supply & Rusal sanctions
Major Japanese Ports (MJP) US Midwest DDP Rotterdam
0
225
Q22017
Q32017
Q42017
Q12018
Q22018
144 143 156 168202
0
250
500
Q22017
Q32017
Q42017
Q12018
Q22018
203 172 208305
480
0
75
150
Q22017
Q32017
Q42017
Q12018
Q22018
11790 94 108
130
Aluminium
for the world
02ALBA HIGHLIGHTS
Alba Highlights - Q2 2018
Launch of Summer Safety Campaign ‘Selfie Safety’
Production up by 23% YoY (252,081 mt) while Sales volume up by 19% YoY (249,595 mt)
Alba Value-Added Sales averaged 60% of total shipments in Q2 2018
Line 6 Expansion Project in progress:
- Closed first part of 2nd tranche ECA-covered facilities (EUR 204.5 million)
- Line 6 Smelter [overall progress > 61%]
- Power Expansion Project [PS 5 & PDS overall progress: 63% & 91%]
Aluminium
for the world
Operational Highlights & Milestones
9
Aluminium
for the world
Safety in Focus - Safety Selfie
10
Alba Highlights - Q2 2018
0
4
8
2014 2015 2016 2017 YTDJune 2018
56
3
6
210
70
2014 2015 2016 2017 YTDJune 2018
57
6964
57
17
Lost Time Injury (LTI) Trend Total Injuries Trend
Alba Highlights - Q2 & H1 2018
EBITDA up due to higher LME prices & impact of Line 5 recovery in Q2 2017
Q2: US$ 117 million up by 22% YoY
H1: US$ 242 million up by 15% YoY
Net Income up supported by higher EBITDA levels
Q2: US$ 77 million up by 65% YoY
H1: US$ 155 million up by 46% YoY
Free-Cash Flow1 up due to higher LME prices & impact of Line 5 recovery in Q2 2017
Q2: US$ 250 million
H1: US$ 383 million
Aluminium
for the world
Financial Key Performance Indicators
11 1 Free Cash Flow excluding Line 6 CAPEX spending
Aluminium
for the world
Project Titan - Phase III: Improve Cash Cost Structure by US$ 60/MT Q2 2018: Achieved Savings of US$ 81/ MT
12
Q2 2018 Target
8160
Project Titan - US$ per MT
*Savings from Project Titan represent the annual US$ cost per mt improvement once all projects are fully implemented
Alba Highlights – Q2 2018
Aluminium
for the world
03Q2 2018 RESULTS
Aluminium
for the world
14
250
350
450
550
650
445
623
75
1 19
83
Q2 2018 vs. Q2 2017 - Metal Sales Bridge (US$M)
Product MixLMEMetal SalesQ2 2017
Pricing Power Metal Sales Q2 2018
Volume
Sales Bridge Analysis Q2 2018 vs. Q2 2017 Higher Sales Volume Due to Line 5 Recovery in 2017 & Higher LME Prices
Q2 2018 ResultsAluminium Industry: Higher Prices on Market Volatility & Trade Wars
Aluminium
for the world
15
100
150
200
250
210
250
23
107
Q2 2018 vs. Q2 2017 Sales by Product-Line Bridge (MT’000)
Premium Above LME Trend US$ Per MT
80
180
280
199
276
Sales Q2 2017
ValueAdded
Sales Q2 2018
LiquidMetal
CommodityQ2 2017 Q2 2018
Higher Sales Volume Due to Line 5 Recovery in 2017 & Higher LME Prices
Q2 2018 ResultsAluminium Industry: Higher Prices on Market Volatility & Trade Wars
Aluminium
for the world
16
Q2 2018 vs. Q2 2017 - Direct Cost Bridge (US$M)
Cost Analysis Q2 2018 vs. Q2 2017: Higher Raw Materials Prices
200
375
550
Direct CostQ2 2017
RMPrice
RMConsumption
EnergyConsumption
OtherRM
AluminaSales Cost
InventoryChange
PlantSpending
Direct CostQ2 2018
376
523
2 2
85
48
8 2 8
Q2 2018 ResultsAluminium Industry: Higher Prices on Market Volatility & Trade Wars
Aluminium
for the world
Favourable Management Performance EBITDA Margin at 17.9%
17
Q2 2018 vs. Q2 2017 - EBITDA Bridge (US$M)
0
150
300
MetalSales
OtherSales
DirectCost
SellingExpenses
96117
178
5
147
5EBITDA 19.9%
EBITDA 17.9%
Q2 2018 ResultsAluminium Industry: Higher Prices on Market Volatility & Trade Wars
EBITDAQ2 2017
EBITDAQ2 2018
Aluminium
for the world
Cash Flow Bridge - Q1 2018 to Q2 2018: Maintain Good Cash Position
18
Q1 2018 to Q2 2018 Cash Flow Bridge (US$M) Free Cash Flow (US$M)
Operating & Investing Cash Flow
(Excluding L6 CAPEX)
-100
100
300
500
CashBalance
1Q18
CFfrom
Operations
WCChanges
CAPEXSpent
Line 6CAPEX
LoanDrawdown
Paymentto
Shareholders
CashBalance
2Q18
114 120
117
150
121
17
365
-20
110
240
Q2 2017 Q2 2018
-17
250
Q2 2018 ResultsAluminium Industry: Higher Prices on Market Volatility & Trade Wars
Aluminium
for the world
19
Solid Management Performance Coupled With Higher LME Prices
Financial Summary Q2 2018 Q2 2017 H1 2018 H1 2017
Average Cash LME (US$/MT) 2,259 1,911 2,209 1,880
Total Sales (US$M) 653 480 1,254 996
EBITDA (US$M) 117 96 242 210
EBITDA% 17.9% 19.9% 19.3% 21.1%
Net Income/ (Loss) (US$M) 77 47 167 115
Q2 2018 ResultsAluminium Industry: Higher Prices on Market Volatility & Trade Wars
Aluminium
for the world
04INDUSTRY PERSPECTIVES IN 2018
Industry Perspectives in 2018
Aluminium
for the world
Physical Demand to Remain Healthy
21
Key factors to be observed:
LME volatility to continue on the back of trade-war tensions and stronger US$
Consumption to slow-down in China while Europe and North America to maintain healthy growth
Global market to face supply shortages
Physical premiums to remain tight
LME price expected to range between $2,000/t - $2,100/t
Industry Perspectives in 2018
Aluminium
for the world
Raw Materials Price Trends
22
Spot alumina prices to remain high pending resolution of Alunorte’sproduction cutbacks
Green Petroleum Coke (GPC) price to remain at the higher range led by Chinese environmental regulations and supply constraints
Liquid pitch & Aluminium Fluoride prices to slightly soften in the second half of 2018
Aluminium
for the world
052018 ALBA PRIORITIES
2018 Alba Priorities
Aluminium
for the world
Sustainable Improvement & Preparation for Future growth
24
Continued focus on Safety initiatives
Deliver on Project Titan - Phase III [2018: 1 Million MT & US$ 60/t]
Leverage strong demand on Value-Added Sales
Focus on future upstream opportunities
Prepare for the start-up of Line 6
- Close final part of 2nd ECA-covered facility tranche
- Award remaining packages within 2nd half of 2018
Aluminium
for the world
06APPENDIX
Aluminium
for the world
26
LMEMetal SalesH1 2017
Pricing Power Metal Sales H1 2018
Volume
750
1,000
1,250
929
1,219168
2 21
99
H1 2018 vs. H1 2017 - Metal Sales Bridge (US$M)
Product Mix
Sales Bridge Analysis H1 2018 vs. H1 2017 Higher Sales Volume Due to Line 5 Recovery in 2017 & Higher LME Prices
H1 2018 ResultsAluminium Industry: Higher Prices on Market Volatility & Trade Wars
Aluminium
for the world
27
H1 2018 vs. H1 2017 Sales by Product-Line Bridge (MT’000)
Premium Above LME Trend US$ Per MT
Sales H1 2017
ValueAdded
Sales H1 2018
LiquidMetal
Commodity H1 2017 H1 2018
200
400
600
453501
309 9
0
100
200
190 238
Higher Sales Volume Due to Line 5 Recovery in 2017 & Higher LME Prices
H1 2018 ResultsAluminium Industry: Higher Prices on Market Volatility & Trade Wars
Aluminium
for the world
28
H1 2018 vs. H1 2017 - Direct Cost Bridge (US$M)
Cost Analysis H1 2018 vs. H1 2017: Higher Raw Materials Prices
0
200
400
600
800
1000
Direct CostH1 2017
RMPrice
RMConsumption
EnergyConsumption
OtherRM
AluminaSales Cost
InventoryChange
PlantSpending
Direct CostH1 2018
766
982
20 16
147
37 15 43 10
H1 2018 ResultsAluminium Industry: Higher Prices on Market Volatility & Trade Wars
Aluminium
for the world
Favourable Management Performance EBITDA Margin at 19.4%
29
H1 2018 vs. H1 2017 - EBITDA Bridge (US$M)
0
250
500
MetalSales
OtherSales
DirectCost
SellingExpenses
210242
290
33
216
9EBITDA 21.1%
EBITDA 19.4%
H1 2018 ResultsAluminium Industry: Higher Prices on Market Volatility & Trade Wars
EBITDAH1 2017
EBITDAH1 2018
Aluminium
for the world
Cash Flow Bridge - FY 2017 to Q2 2018: Maintain Good Cash Position
30
FY 2017 to H1 2018 Cash Flow Bridge (US$M) Free Cash Flow (US$M)
H1 2018 ResultsAluminium Industry: Higher Prices on Market Volatility & Trade Wars
-200
0
200
400
600
CashBalance
2017
CFfrom
Operations
WCChanges
CAPEXSpent
Line 6CAPEX
LoanDrawdown
Paymentto
Shareholders
CashBalance
1H18
206120
242
169
385
28
756
98
-10
185
380
YTD2017
YTD2018
-6
383
Operating & Investing Cash Flow
(Excluding L6 CAPEX)
31
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Aluminium
for the world
For more information, contact us on:
IR@alba.com.bh
Manama (ALBH)
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