INVESTORRELATIONS PRESENTATION 2016 Presenta… · “Company”). The document is being supplied...

Aluminium

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INVESTOR RELATIONSPRESENTATION

2016

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

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3

01IndustryHighlights

CONTENTS

02ALBAHighlights

032016Results

04IndustryPerspectivesin 2017

052017ALBA Priorities

Aluminium

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Aluminium

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01INDUSTRY HIGHLIGHTS1

1Industry Highlights are based on CRU analysis

Industry Highlights – 2016

World consumption at 59.6 million metric tonnes (mt) and up by 5% YoY

Asian demand up by 7% YoY supported by consumption in China (+5% YoY)

MENA demand remains strong (+6% YoY) driven by Saudi Arabia infrastructure spending (+16% YoY)

Europe consumption up by at 3% driven by a solid boom in auto and construction sectors in Germany

Demand in North America up by 2% YoY mainly driven by the auto production

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Global Physical Demand Still Strong

5


World production up by 3% YoY

Chinese output continue to rise (+31.4 million mt , 4% YoY) on the back of smelters’ restarts in many provinces

North America production down by 9% YoY (4 million mt)

World market in deficit with China (-712Kt) and in deficit w/o China (-723kt )

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Production Evolution

6


LME inventories at 2.2 million mt in December

Q4 2016 cash-average was $1,710/t with LME ranging between$1,612/t on October 20 and $1,777/t on November 11

Physical premiums prices continue to float at lower range ($/t):

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LME & Premiums

7

Major Japanese Ports (MJP) US Midwest DDP Rotterdam

0

100

200

Q42015

Q12016

Q22016

Q32016

Q42016

150 142 127 114 132

0

100

200

Q42015

Q12016

Q22016

Q32016

Q42016

175 190 173143

166

0

75

150

Q42015

Q12016

Q22016

Q32016

Q42016

88109 102

74 69

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02ALBA HIGHLIGHTS

Alba Highlights – 2016

Continuous improvement in Safety performance

Alba wins Gold at the International Green Apple Awards’

Sales Volume up by 2.3% YoY, to reach 974,014 mt while Production volumestood at 971,420 mt (+1.1% YoY)

Alba managed to close 2016 with its Value-Added (VA) sales averaging 56%of total shipments

Alba successfully upgrades Casthouse 2 to produce Foundry T-Bar

Alba ramps-up creep project for Reduction Lines 4 & 5

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Operational Highlights & Achievements

9


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Sales Breakdown by Geographic Footprint Expanding in US and Europe Markets

10

Asia17%

Bahrain48%

Europe10%

Americas9%

MENA 16%

2015

Asia17%

Bahrain45%

Europe17%

Americas11% MENA

10%

2016

Alba Highlights – Q4 & FY 2016

Adjusted EBITDA up in Q4 on the back of higher LME prices and savings in Titan -Phase II

Q4: US$85 million up by 51% YoY

FY: US$327 million down by 19% YoY

Adjusted Net Income up in Q4 driven by higher EBITDA levels in Q4

Q4: US$ 37 million up by 186 % YoY

FY: US$129 million down by 12% YoY

Free-Cash Flow 1 unfavourable due to lower premium prices

Q4: US$ 55 million down by 27% YoY

FY: US$ 204 million down by 39% YoY

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Financial Key Performance Indicators

11 1 Free Cash Flow excluding Line 6 CAPEX spending


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Project Titan II - Improve Cash Cost structure Full-Year 2016: Project Titan II Achieved Savings of US$ 78 per tonne

12

72 78100

Project Titan - US$ per MT

Achieved2016

TargetTarget2016 2017

*Savings from Project Titan represent the annual $cost per mt improvement once all projects are fully implemented

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13

1,000

2,500

4,000

2015 2016

2,9272,621

663

498

3,5903,119

Total Head Count External Internal

605544

64%

56%

2015 2016

3848

2015 2016

9186

2015 2016


Operational Excellence Continues to Sustain Momentum

Head Management Count Value-Added Sales (MT’000) as a % of Total Sales

Account Receivable Days Inventory Days Trend

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14

Cash, Net Debt & Net Debt to EBITDA

FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

513362

184

-71 -39

164

172

179

309177

1.25

1.0

0.4-0.22

-0.12

Net Debt Cash Net Debt to EBITDA


Maintain Solid Balance Sheet & Ready to Finance Line 6

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032016 RESULTS

2016 ResultsAluminium Industry: All-in-Prices at Lower Range

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Favourable Management Performance Partially Offset by Lower Premiums

16

LMEMetal Sales2015

Pricing Power Metal Sales 2016

Volume

1000

1400

1800

2200

1,993

1,726

96

28189 46

2016 vs. 2015 - Metal Sales Bridge (US$M)

Product Mix


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17

2016 vs. 2015 - Sales by Product Line Bridge (MT’000)

Premium Above LME Trend US$ Per MT

Sales 2015

ValueAdded

Sales 2016

LiquidMetal

Commodity 2015 2016700

1000

952 974

61

7

90

100

300

500

410

188

Higher Sales Volume and Lower Physical Premiums

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18

2016 vs. 2015 - Direct Cost Bridge (US$M)

Direct Cost2015

RMPrice

Alumina Sales Cost

RMConsumption

EnergyCons.

Plant Spending

One-OffCosts

Cost Analysis 2016 vs. 2015

1100

1400

1700

1,643

1,442

207

3630

57 61

10

47

InventoryChange

Direct Cost2016


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Adjusted EBITDA Bridge Gap Analysis - 2016 vs. 2015 Adjusted EBITDA Margin at 18.1%

19

2016 vs. 2015 - EBITDA Bridge (US$M)

EBITDA 2015Adjusted

Metal Sales

DerivativesOther Sales Direct Cost Selling Expenses

EBITDA 2016Adjusted

0

200

400

352326

266

30

201

11

2

EBITDA 17.3% EBITDA 18.1%


0

250

500

750

309

173

326

44

78

208

21

107

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Cash Flow Bridge - 2015 to 2016 Maintain Solid Cash Flow Trend

20

2016 to 2015 Cash Flow Bridge (US$M) Free Cash Flow (US$M)

0

150

300

450

333

204

2015 2016

Operating & Investing Cash Flow (Excluding L6 CAPEX)

Cash Balance

2015

Payment to

Shareholders

WCChanges

CAPEXSpent

Net Debt Service

Cash Balance

2016

LINE 6CAPEX

CF from

Operations


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21

Working Capital as Percentage of Sales

Good Working Capital Trend as Percentage of Sales

16%

18%

12%

17%

22%

Percentage2015 2016


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22

Favourable Management Performance Despite Lower LME Prices

Financial Summary Q4 2016 Q4 2015 FY 2016 FY 2015

Average Cash LME (US$/MT) 1,710 1,495 1,604 1,663

Sales (US$M) 483 469 1,803 2,039

EBITDA (US$M) 85 9 326 352

EBITDA% 17.6% 2.0% 18.1% 17.3%

EBITDA (Excl. One-Off Costs) (US$M) 85 56 327 401

EBITDA% (Excl. One-Off Costs) 17.6% 12.0% 18.1% 19.7%

Net Income/ (Loss) (US$M) 37 -42 129 159


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04INDUSTRY PERSPECTIVES IN 2017

Industry Perspectives in 2017

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Global Physical Demand to Remain Healthy

24

Key factors to be observed:

LME volatility will continue on the back of appreciation in US Dollar due to higher interest rates and higher Chinese production

North America demand to grow driven by strong automotive production

MENA output to rise on the back of infrastructure spending

LME price to range between $1,700/t - $1,800/t

Industry Perspectives in 2017

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Raw Materials Price Trends

25

Alumina expected to be volatile based upon Chinese consumption patterns

Green coke prices are expected to rise

Liquid Pitch material prices are set to appreciate in Q1 2017 and then remain stable with minor fluctuation for the remainder of the year

Aluminium Fluoride (ALF3) prices will remain stable

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052017 ALBA PRIORITIES

2017 Alba Priorities

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Sustainable Improvement & Preparation for Future Growth

27

Focus on Safety Tomorrowland Initiative

Deliver on Project Titan - Phase II

Leverage Strong Physical Demand Conditions and Sustain and focus on Value-Added Sales

Increase Creep Capacity with Minimal Capital Investment

Line 6 on Schedule

Finalize ECA Financing Tranche by Q1 2017

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06APPENDIX

Q4 2016 ResultsAluminium Industry: Rebounding LME prices

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Sales Analysis 4Q16 vs. 4Q15 Unfavourable sales revenue due to low LME prices

29

350

425

500

459473

132 7

4Q16 vs. 4Q15 - Metal Sales Bridge (US$M)

Product MixLMEMetal Sales4Q16

Pricing Power Metal Sales 4Q16

Volume

40

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Favourable sales volume

30

100

200

300

253 256

4 310

4Q16 vs. 4Q15 - Sales by Product Line Bridge (MT’000)

Premium Above LME Trend US$ Per MT

0

200

400

306

175

Sales 4Q15

ValueAdded

Sales 4Q16

LiquidMetal

Commodity4Q15 4Q16


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31

Cost Analysis 4Q16 vs. 4Q15

446

388

1 11

15

Direct Cost4Q16

33

146

4


4Q16 vs. 4Q15 - Direct Cost Bridge (US$M)

Direct Cost4Q15

RMPrice

Alumina Sales Cost

RMConsumption

EnergyConsumption

Inventory Change

One-OffCosts

Plant Spending

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Adjusted EBITDA Bridge Adjusted EBITDA Margin at 17.6%

32

0

50

100

9

14

0

58

13

85

EBITDA 2% EBITDA 17.6%

4Q16 vs. 4Q15 - EBITDA Bridge (US$M)

EBITDA 4Q15Adjusted

Metal Sales

DerivativesOther Sales Direct Cost Selling Expenses

EBITDA 4Q16Adjusted


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Cash Flow Bridge – 3Q16 to 4Q16 Maintaining Good Cash Position

33

3Q16 to 4Q16 Cash Flow Bridge (US$M) Free Cash Flow (US$M)

0

100

7255

4Q 2015 4Q 2016

Operating & Investing Cash Flow

0

200

400

293

173

88

0

33

990

72

Cash Balance

3Q16

Payment to

Shareholders

WCChanges

CAPEXSpent

Net Debt Service

Cash Balance

4Q16

LINE 6CAPEX

CF from

Operations


(Excluding L6 CAPEX)

34

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