INVESTOR RELATIONS PRESENTATION - Aluminium Bahrain Presenta… · Forward-looking statements speak...
Transcript of INVESTOR RELATIONS PRESENTATION - Aluminium Bahrain Presenta… · Forward-looking statements speak...
Aluminium
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INVESTOR RELATIONSPRESENTATION
Q2 2019
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.
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3
01IndustryHighlights
CONTENTS
02ALBAHighlights
03Q2 2019Results
04IndustryPerspectivesin 2019
052019ALBA Priorities
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Aluminium
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01INDUSTRY HIGHLIGHTS
1 Industry Highlights are based on CRU analysis
Industry Highlights - Q2 2019
Global economic conditions continued to weaken in the 2nd quarter: US-China trade tensions and geopolitical events have taken its toll on investors and added bearish dimension to the market sentiment
Primary demand dropped in North America and Europe (almost flat) due to cyclical slowdown in economic activity
Stimulus measures adopted by the Chinese Government have failed to create activity in key market-sectors such as auto and construction (+1% YoY)
MENA consumption slowed down (+1% YoY) on the back of weaker construction activities. Consumption in Saudi Arabia retreated to 1-digit growth of 5% YoY with Ma’aden rolling-mill full ramp-up completion
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Global Physical Demand Grew Modestly
5
Industry Highlights - Q2 2019
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Global Production – Modest Growth at +1% YoY
6
North America supply growth gained momentum after 2018 lacklustre (+8% YoY)
Russia, India and Bahrain were the largest contributors to the world ex-China smelter production increase
World market in deficit with China (529 Kt) & (205 Kt) without China
LME inventories at ~1 million MT as of June-end (down by 11% YoY)
LME-Cash averaged US$1,793/t - down by 21% YoY [lowest: US$1,719/t on 17 June and highest: US$1,888/t on 01 April]
Physical premium prices under pressure (US$/t):
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LME & Premiums
7
Major Japanese Ports (MJP) US Midwest DDP Rotterdam
0
225
Q22018
Q32018
Q42018
Q12019
Q22019
202158
134 135 149
0
250
500
Q22018
Q32018
Q42018
Q12019
Q22019
480 455 485 507 450
0
75
150
Q22018
Q32018
Q42018
Q12019
Q22019
129 132103
85105
Industry Highlights - Q2 2019
Aluminium
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2,259
2,056
1,968
1,8591,793
1,700
1,900
2,100
2,300
Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019
Alumina Price/LME Price Trend
LME Price Trend (US$/T)
Alumina Price Still Historically High - 20% of LME Price
Industry Highlights - Q2 2019
23%
26%
22%
21%20%
10%
16%
22%
28%
Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019
Aluminium
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02ALBA HIGHLIGHTS
8 Million working-hours w/o LTI achieved on July 08th
Sales’ volume up by 25% YoY to top 311,928 metric tonnes (mt)
Production up by 21% YoY to reach 305,727 mt
Alba Value-Added Sales averaged 52 % of total shipments in Q2
Line 6 Expansion Project Milestones:
- Line 6 Smelter: handover of remaining pots for Safe start-up
- Line 6 Smelter’s Overall Progress advanced by > 96%
- Power Expansion Project [PS5 > 95% & PDS > 99%]
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Operational Highlights & Achievements
10
Alba Highlights – Q2 2019
11
2
5
8
2015 2016 2017 2018 Q2 2019
6
3
6
30 0
35
70
2015 2016 2017 2018 Q2 2019
69 6457
32
6
Lost Time Injury (LTI) Trend Total Recordable Injuries
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Safety in Focus - Safety Gateway
Alba Highlights – Q2 2019
8 Million Working-Hours Achieved on July 08th
Alba Highlights - Q2 & H1 2019
EBITDA impacted by lower LME prices
Q2: US$53 million down by 55% YoY
H1: US$60 million down by 75% YoY
Adjusted Net Income/(Loss) driven by lower EBITDA levels
Q2: US$2 million down by 97% YoY
H1: (US$35) million down by 123% YoY
Free-Cash Flow1 driven by higher maintenance CAPEX and unfavourable working capital
Q2: US$77 million down by 69% YoY
H1: US$52 million down by 86% YoY
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Financial Key Performance Indicators
12 1 Free Cash Flow excluding Line 6 CAPEX spending
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AchievedYTD
Target2019
Target2020
12
40
60
Project Titan - US$ Million
Project Titan - Phase IV: Improve Cash-Cost Structure by US$100M by end of 2020 [2019: US$40M & 2020: US$60M]
Alba Highlights – Q2 2019
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03Q2 2019 RESULTS
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Metal Sales’ Bridge Analysis - Q2 2019 vs. Q2 2018 Lower LME Prices Offset by Higher Sales’ Volume
Q2 2019 ResultsAluminium Industry: Economic Uncertainty & Lower LME Price
250
450
650
Metal SalesQ2 2018
LME Product Mix Pricing Power Volume Metal SalesQ2 2019
623 628
156125
6 20
Q2 2019 vs. Q2 2018 - Metal Sales’ Bridge (US$M)
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Higher Sales’ Volume Underpinned by Higher Value-Added & Commodity Sales’ Volume
Q2 2019 ResultsAluminium Industry: Economic Uncertainty & Lower LME Price
50
100
150
200
250
300
Q2 2018 Q2 2019
276
194
100
175
250
325
SalesQ2 2018
ValueAdded
LiquidMetal
Commodity SalesQ2 2019
250
312
5712
7
Q2 2019 vs. Q2 2018Sales by Product-Line Bridge (MT’000)
Premium Above LME Trend US$ Per MT
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Q2 2019 vs. Q2 2018 - Direct Cost Bridge (US$M)
Cost Analysis Q2 2019 vs. Q2 2018
Q2 2019 ResultsAluminium Industry: Economic Uncertainty & Lower LME Price
250
350
450
550
650
Direct CostQ2 2018
RMPrice
RMConsumption
EnergyPrice
OtherRM
AluminaSales' Cost
InventoryChange
PlantSpending
Direct CostQ2 2019
523556
45 47
9 29 3015 8
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EBITDA Bridge GAP Analysis – Q2 2019 vs. Q2 2018 EBITDA Margin at 8.4%
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Q2 2019 vs. Q2 2018 - EBITDA Bridge (US$M)
Q2 2019 ResultsAluminium Industry: Economic Uncertainty & Lower LME Price
0
75
150
EBITDAQ2 2018
MetalSales
OtherSales
DirectCost
SellingExpenses
EBITDAQ2 2019
117
53
5
30
34
5
EBITDA 17.9%
EBITDA 8.4%
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Cash Flow Bridge: Q1 2019 to Q2 2019
19
Q1 2019 to Q2 2019 Cash Flow Bridge (US$M) Free Cash Flow (US$M)
Q2 2019 ResultsAluminium Industry: Economic Uncertainty & Lower LME Price
0
50
100
150
200
250
300
Q2 2018 Q2 2019
250
77
Operating & Investing Cash Flow(Excluding L6 CAPEX)
-10
140
290
CashBalance
1Q19
CFfrom
Operations
WCChanges
CAPEXSpent
Line 6CAPEX
LoanDrawdown
Paymentto
Shareholders
CashBalance
2Q19
155
243
53
4420
235 246
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Lower LME Price Pulling Down Aluminium Industry Profitability
Financial Summary Q2 2019 Q2 2018 H1 2019 H1 2018
Average Cash LME (US$/MT) 1,793 2,259 1,826 2,209
Average Alumina Price (US$/MT) 360 526 373 455
Total Sales (US$M) 628 653 1,155 1,254
EBITDA (US$M) 53 117 60 242
EBITDA% 8.4% 17.9% 5.2% 19.3%
Net Income/ (Loss) (US$M) (9) 77 (51) 167
Gain/ (Loss) Unrealised Derivatives (US$M) (11) 3 (16) 13
Adjusted Net Income/ (Loss) (US$M) 2 75 (35) 155
Q2 2019 ResultsAluminium Industry: Economic Uncertainty & Lower LME Price
Aluminium
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04INDUSTRY PERSPECTIVES IN 2019
Industry Perspectives in 2019
Aluminium
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Demand to Grow Despite Economic Uncertainty
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Key factors to be observed:
Global demand, in the short-term, to face headwinds from slower economic activity and greater availability of scrap in the world ex-China
Federal Reserve (Fed) expected to cut interest rates
LME volatility to continue on the back of trade-wars and global economic uncertainty
Physical premiums to soften as producers compete aggressively for VAP
LME price expected to range between US$1,800/t - US$1,900/t
Industry Perspectives in 2019
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Raw Materials Price Trends
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Alumina spot prices expected to further drop on the back of Alunorte re-start and EGA Refinery ramp-up
Green Petroleum Coke (GPC) & Liquid Pitch prices to remain low
Aluminium Fluoride (ALF3) to soften on the back of lower Alumina prices
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052019 ALBA PRIORITIES
2019 Alba Priorities
Aluminium
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Safety Focus & Line 6 Ramp-up to Full Production
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Continuous Focus on Safety Gateway Initiatives
Deputy CEO, Mr. Ali Al Baqali, to be Acting CEO effective August 1st
Deliver on Project Titan -Phase IV [US$40 million by 2019-end]
Value-Added Sales’ Product Qualification Associated with Line 6 Ramp-up
Develop Upstream Opportunities on Alumina
Ensure the Safe Start-up of Last Hot Metal
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06APPENDIX
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LMEMetal SalesH1 2018
Pricing Power Metal Sales H1 2019
Volume500
750
1,000
1,250
1,2191,154
204
7 19
H1 2019 vs. H1 2018 - Metal Sales Bridge (US$M)
Product Mix
Sales Bridge Analysis H1 2019 vs. H1 2018 Lower LME Prices Partially Offset by Higher Sales’ Volume
H1 2019 ResultsAluminium Industry: Economic Uncertainty & Lower LME Price
165
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1H19 vs. 1H18Sales by Product Line Bridge (MT’000)
Premium Above LME Trend US$ Per MT
Sales H1 2018
ValueAdded
Sales H1 2019
LiquidMetal
Commodity H1 2018 H1 2019
250
350
450
550
501
569
0
82
0
50
100
150
200
250
238
193
Higher Sales’ Volume Underpinned by Higher Commodity Sales’ Volume
H1 2019 ResultsAluminium Industry: Economic Uncertainty & Lower LME Price
14
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H1 2019 vs. H1 2018 - Direct Cost Bridge (US$M)
Cost Analysis H1 2019 vs. H1 2018
H1 2019 ResultsAluminium Industry: Economic Uncertainty & Lower LME Price
500
600
700
800
900
1,000
1,100
1,200
Direct CostH1 2018
RMPrice
RMConsumption
EnergyPrice
OtherRM
AluminaSales' Cost
InventoryChange
PlantSpending
Direct CostH1 2019
9821,055
2170
17 40 33 33
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EBITDA Bridge GAP Analysis – H1 2019 vs. H1 2018 EBITDA Margin at 5.2%
30
H1 2019 vs. H1 2018 - EBITDA Bridge (US$M)
0
50
100
150
200
250
EBITDA H1 2018 MetalSales
OtherSales
DirectCost
SellingExpenses
EBITDA H1 2019
242
60
65
33
72
12
EBITDA 19.3%
EBITDA 5.2%
H1 2019 ResultsAluminium Industry: Economic Uncertainty & Lower LME Price
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Cash Flow Bridge: H1 2019 vs. FY 2018
31
FY 2018 to H1 2019 Cash Flow Bridge (US$M) Free Cash Flow (US$M)
H1 2019 ResultsAluminium Industry: Economic Uncertainty & Lower LME Price
-200
0
200
400
600
CashBalance
2018
CFfrom
Operations
WCChanges
CAPEXSpent
Line 6CAPEX
Loan Paymentto
Shareholders
CashBalance
1H19
276 243
6041
402
49
487
0
0
100
200
300
400
YTD2018
YTD2019
383
52
Operating & Investing Cash Flow
(Excluding L6 CAPEX)
Drawdown
32
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