AMAG Austria reports 42% drop in H1 2019 earning despite higher shipment; attributed to lower aluminium price

AMAG Austria Metall AG has released the results for H1 2019 registering total shipments of 226,000 tonnes, up 10 % compared with H1 2018.

Gerald Mayer, CEO of AMAG, comments: "We benefited from additional production capacity in the first half of the year. In the Casting Division, we grew shipment volumes in the double-digit percentage range mainly thanks to our new melting furnace. In the Rolling Division, we successfully continued the ramp-up of the most modern aluminium rolling mill in Europe and also significantly increased shipments."

AMAG sees a positive demand growth for primary aluminium and rolled products despite the negative effects of the trade war and economic slowdown on demand and aluminium price. LME aluminium price dropped 16% to USD 1,850 per tonne from H1 2018.

Revenue increased by 3 % to EUR 554.6 million compared with H1 2018 attributing to higher shipments. EBITDA dropped to EUR 72.0 million in H1 2019, compared with EUR 86.2 million in H1 2018 due to lower aluminium price. Rolling Division registered a significant increase in shipment as a result of the ongoing ramp-up at the Ranshofen site.

Net income after taxes dropped to EUR 18.9 million during H1 2019 compared to EUR 33.0 million in H1 2018.

Considering CRU’s forecast, AMAG expects global demand in 2019 for primary aluminium and aluminium rolled products to grow by 1 % and 3 % respectively. Annual growth rates of 3 to 4 % are expected over the next five years.

"The medium-term outlook for aluminium and its alloys offers a promising basis for our growth strategy, which we will consistently pursue. With the most modern aluminium rolling mill in Europe, our technological expertise and our focus on aluminium recycling, we are ideally positioned to benefit long-term from growing demand for aluminium," Gerald Mayer, CEO of AMAG said.

The abolition of additional US import duties on aluminium for Canadian aluminium may likely to benefit AMAG through its interest in the Canadian Alouette smelter, unless the US premium level is adjusted to reflect this abolition. AMAG expects YoY growth in rolling product shipment driven by the timely progress in ramp-up of the Rolling Division.

AMAG expects the prices for aluminium and raw materials to exhibit volatilities over the course of the year. Various factors like economic growth, trade conflicts and the sales development of the customers may influence the demand and price development in H1 2019. AMAG maintains a flexible earnings forecast for FY2019, expecting EBITDA for the AMAG Group to range between EUR 125 million and EUR 150 million.