Alba Annual Report 2011

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Aluminium Bahrain (Alba) Annual Report for 2010, for more information please visit our official website http://www.albasmelter.com

Text of Alba Annual Report 2011

  • 1.Balancing40 years of experience and ready to take on the future Annual Report 2011Aluminiumfor the world

2. His Royal Highness His Majesty King His Royal Highness Prince KhalifaHamad bin Isa Prince Salman bin Salman Al KhalifaAl Khalifabin Hamad Al Khalifa The Prime Minister of the The King of the The Crown Prince & DeputyKingdom of Bahrain Kingdom of Bahrain Supreme CommanderAnnual Report 2011 | 2 3. Contents Board of Directors 4 Executive Management 5Letter to our Shareholders6-7CEOs Message 8-11 Albas Operational Highlights12-13Albas Financial Highlights 14-15Corporate Governance16-23Products & Markets24-27 Health, Safety and Environment 28-33 Corporate Social Responsibility34-39Financial Statements40-74Annual Report 2011 | 2 4. Board of Executive Directors ManagementM.& Acting Chief Operations OfficerYAnnual Report 2011 | 4 5 | Annual Report 2011 5. | Letter to our Letter to our1200Shareholders 1,053Shareholders1000 878 800 600 400 Alba continues to work for the 200 Alba remainsbest interest of its 0committed to futureshareholders by growth through committing to invest pro-active in organic growth Total Debt initiatives (US$ million) -16.7% Y-o-Y Growth Dear Shareholders, 2011 was a breakthrough year, one in which further strengthen its reputation for integrityand a commitment to operational efficiency and Alba succeeded in meeting all of its targets, with and to confirm the company as a champion for global competitiveness. an EBITDA and Free Cash Flow at US$ 582ethical values. million and US$ 606 million, respectively. This I would like to thank you, our shareholders, achievement cannot be taken for granted, Alba celebrates its four decades of operations --for the trust you have placed in me, and in Albas considering the many operating challenges that Albas inception in the late 1960s triggered theboard and management teams during this first the company faced in 2011, as well as the lowindustrialization process not only in Bahrain butyear as a publicly listed company; I hope your LME levels in the latter period of the year. throughout the region, and also marked the first confidence in us continues in the future.non-oil industrial diversification initiative We have retained our solid financial positionundertaken in a Gulf state. 1971 is the year thatMy sincere gratitude goes as well to Albas board from the sustained upward trend in LME marked the inauguration of our industrial plantof directors, its management team, and all of its and were able to increase our revenues towith a total capacity of 120,000 metric tonnes.employees, whom without their expertise and US$ 2,349,000 despite the slump the European Today, the companys fully fledged operationscommitment Alba would not have been able toCash Payback 300 market has faced since the last quarter of 2011. run with an annual capacity of more than transform its challenges into such exciting267880,000 metric tonnes - a 5% CAGR in capacityopportunities.to ShareholdersAlba continues to work for the best interest of itssince start-up forty years ago.238 shareholders by committing to invest in organic In conclusion, it gives me pleasure to express my(US$ million)growth and consistently to pay back cash to itsA key component to this growth has been agratitude to His Majesty the King of Bahrain, 12% Y-o-Y Growth 200 shareholders, while maintaining a strong sustained emphasis on lean managementKing Hamad bin Isa Al Khalifa; for the guidance balance sheet. In fact, for the 2011 financial year, techniques as well as a continued focus on of His Royal Highness the Prime Minister, Prince Alba paid Fils 0.067 a share.operational efficiency. It has provided theKhalifa bin Salman Al Khalifa; for the support ofcompany with the springboard for achieving its His Royal Highness the Crown Prince and 2011 marked the first anniversary of Albasgoals for productivity and increased profitability.Chairman of the Bahrain Economic transformation into a commercial entity --Development Board, Prince Salman bin Hamad 100 through a dual listing on the Bahrain Bourse Viewed most broadly, the 2011 results also Al Khalifa, and to the Government of the and on the London Stock Exchange -- and hasreflect the solid fundamentals at work at Alba Custodian of the Two Holy Mosques, His Majesty set the stage for greater emphasis on pursuing and will give us good momentum moving into King Abdullah Ibn Abdul Aziz Al Saud of the sound corporate governance, increased2012. Looking ahead, Alba remains committedKingdom of Saudi Arabia, whom without their transparency and industry best practices. As a to future growth through proactive initiatives support Albas accomplishments would not have result, Alba has launched its Code of Conduct to building upon a culture of technical excellencebeen possible.Annual Report 2011 | 6 7 | Annual Report 2011 6. | CEOs Message750 606600 495450CEOs 300Message 150 02011 provedto be a momentous 2011 proved to be a momentous year in AlbasFree-Cashyear in Albas historyhistory since it marked record achievementsin both production and sales. These Flowsince it marked recordaccomplishments were particularly significant,2011 Highlights (US$ million)achievements in in that they took place in the shadow of achallenging year for businesses in the kingdom - A Strong Framework 22% Y-o-Y Growthboth production of Bahrain as well as against the background offor Sustainableand sales volatile aluminium prices. ImprovementI am pleased to say that Alba succeeded inovercoming these challenges by recordingexceptional performance in 2011.Production figures for 2011 topped 881,310Alba SmartWay, which was launched in Solutions. Its stated objective is to achievemetric tonnes - the highest recorded metal2010, continued to set the tone for delivering a record throughout the organization ofproduction in Albas 40-year history - and aenhanced competitiveness, greater operationalzero incidents causing physical harm, and itsubstantial leap from the 850,700 metric tonnes efficiency and increased savings across thehas succeeded in laying the foundations ofproduced in 2010. As a result, the sales volume company. Success in adopting continuousimportant new safety principles within thefor the full-year 2011 reached 893,020 metric improvement and lean managementcompany.tonnes versus 854,593 metric tonnes in 2010 techniques as part of Alba SmartWay enabled881,310 an increase of 4.5 per cent compared to the us to retain a strong operational focus whileAlbas determination to enlarge the global Production850,7001,000,000 previous year.facing the strategic challenges, and setting the footprint of its product portfolio gainedstage for us to move toward being a globalGrowthAlba also benefited from the sustained upward force in the aluminium industry. momentum in 2011 with the opening of sales offices in Zurich, Switzerland and in Hong Kong.(Metric Tonnes)800,000LME trend in 2011, and was able to grow itsrevenues by 18% year-on-year despite theThe implementation of Six Sigma in 2011 as These offices will tap into the growing demand for primary aluminium from customers in 3.6% Y-o-Y Growthslowdown in the European market. EBITDA for part of Alba SmartWay further reinforced the Europe and Asia. 600,000the year reached US$ 582 million compared tostrong fundamentals of Alba and proved toUS$ 552 million in 2010 the 2nd straight year boost quality output, eliminate variability andThe completion of the pre-feasibility studiesof positive growth. Our Cash Flow performance achieve measureable returns. for the Line 6 expansion project was anotherwas strong as we generated US$ 651 million inkey highlight in 2011. The studies aimed to 400,000Operating Cash Flow and grew our Free CashAlba was able to generate recurrent savingsdetermine the optimum energy sources andFlow by 22% compared to 2010. This soundworth US$ 173 million in 2011 on a comparabletechnology solutions for the new proposed potperformance enabled Alba to pay cash back basis to US$ 110 million in the previous year line as well as look at solutions for future energy 200,000to its shareholders of US$267 million in 2011 ahead of the set target by US$ 3 million.requirements.as well as allowing the company to reduce theoverall debt profile by US$ 175 million, all while2011 saw another milestone the launch 0retaining a very sound balance sheet. of Alba SafeWay with DuPont Sustainable Annual Report 2011 | 8 9 | Annual Report 2011 7. | CEOs Message MovingAheadWith a major focus on organic growth, Albaremains determined to reduce its operatingcosts, achieve additional cash savings perannum of US$ 30 million in 2012 and improveprocesses through the continuous roll-out ofplant wide Six Sigma. The management teamis confident that STAR program achievementswill enable Alba to be among the lowest costaluminium producers in the world.In 2012, we will launch the bankable feasibilitystudies - expected to be completed by the endof the year - for the Line 6 expansion project.With Line 6 fully operative, Alba will be able toincrease its production by 400,000 metric tonnesper year, enabling the company to be positionedamongst the largest single smelters in the world. People WhoMake It HappenAs always, we remain indebted to Albasworkforce and the Labour Union, who havemade 2011 such a landmark year. We extend ourthanks and appreciation to our clientele for theirutmost trust and confidence. And, I take theopportunity to thank our Board of Directors fortheir wise stewardship and strategic guidance.Notwithstanding the challenges in 2011, wehave had an exceptionally successful year, andour confidence in our vision for the future hasfurther strengthened. We are excited about theH.H. theroad ahead and we remain optimistic that, withLate Amir ofAlbas core fundamentals, 2012 will be anothersuccess story.BahrainInauguratedthe smelterin 1971Annual Report 2011 | 1011 | Annual Report 2011 8. JuneOperationalAlbas rail replacement projectat the ReductionPotlines 1,