EGA’s 2018 net profit declines 64% and adjusted EBITDA 33% despite surge in revenue

Emirates Global Aluminium has announced its annual financial report of 2018, where it is found that the UAE’s biggest industrial company outside the oil and gas sector has earned a net income of AED 1.2 billion ($325 million), 64 per cent down from AED 3.3 billion ($900 million) in 2017. This havoc decline in EGA’s net income is attributable to the surging costs of raw materials, which is why the company wants to start its alumina refinery in Abu Dhabi and bauxite mine in Guinea. These two projects are expected to reduce the company’s expense towards securing raw materials from overseas and help in boosting its net profit, as a result.

Adjusted EBITDA, which was at AED 6.6 billion ($1.8 billion) in 2017 also decreased by 33 per cent in 2018 to AED 4.4 billion ($1.2 billion), despite a revenue hike by 14 per cent from AED 20.5 billion ($5.6 billion) in 2017 to AED 23.5 billion ($6.4 billion). Higher sales volume, higher benchmark price and product premiums, and higher volume of value-added products were some of the factors that stood in favour of revenue surge.

Abdulla Kalban, EGA’s managing director and chief executive, said in a statement: “The aluminium industry is going through a challenging period with higher prices for our raw materials and lower benchmark prices for the finished metal. This is reflected in our financial performance for 2018, although EGA achieved record production and value-added product sales and continued our strong focus on cost control and operational efficiency.”

Danny Dweik, the chief financial officer of EGA, told The National that once the two projects of alumina and bauxite would come online this year, some of the cost savings and implications would expectedly come into our bottom line.

Retaining the position as the third largest producer of primary aluminium in the world (excluding China), EGA had a record cast metal production of 2.64 million tonnes in 2018, up from 2.6 million tonnes in 2017. EGA continued to be the world’s largest ‘premium aluminium’ producer.

There was also strong progress on delivery of two of its strategic upstream growth projects - Al Taweelah alumina refinery in Abu Dhabi and the Guinea Alumina Corporation bauxite mining project in the Republic of Guinea. Both the projects are expected to start production in 2019.

The mine will reportedly produce 12 million tonnes of bauxite per year. Besides feeding Al Taweelah alumina refinery, it will also sell the ore to third-party customers globally, creating a new revenue stream for EGA.