ALUMINIUM Bahrain (Alba) expressed confidence in maintaining its competitive position while revealing its second quarter net profit dropped by almost half to BD35.6 million ($95 million) on lower metal prices and higher gas costs.

Aluminium prices on the London Metal Exchange dipped close to $600 a tonne when compared with the same period last year, according to the company.

Bahrain’s state-run energy supplier also raised Alba’s gas supply costs by $0.75 per million metric British thermal units (mmbtu) to $2.25/mmbtu on January 1.

The firm, which owns the world’s fourth-largest aluminium smelter, made a profit of BD69.7 million in the same quarter of 2011, a statement published on the Bahrain bourse showed.

Announcing the results, Alba said its second quarter sales surged to $523 million amid growing demand for aluminium globally.

The company registered a solid 1.7 per cent growth in production during the quarter besides netting an additional recurrent savings of $12 million.

Al Kooheji: key fundamentals remain strong

Its earnings before interest, taxes, depreciation, and amortisation (Ebitda) hit $115 million. The company announced an interim dividend of $52.6 million for its shareholders.

Commenting on the results, Alba’s chief executive Laurent Schmitt said “without LME and the gas impact, the company was able to maintain its intrinsic value.”

“The company has successfully managed its working capital and was able to spin its value-added sales back to record levels – 67 per cent as of the second quarter despite the downbeat sentiment of global market and downward trend of aluminium prices,” he stated.

“We remain confident that Alba will maintain its competitive position for the remainder of 2012 through an ongoing focus on Continuous Improvement Programmes as well as commitment to Operational Efficiency initiatives,” he added.

STRONG FUNDAMENTALS
Alba board chairman Mahmood Hashim Al Kooheji said the Bahrain firm’s success for the past 40 years has been primarily due to its key fundamentals that continue to remain strong and offer a springboard for healthy performance.

Distributing an interim dividend endorses the company’s strong business model in delivering continuous returns to its shareholders, he said.

“I would also like to express my appreciation to the executive management team for their leadership in steering the company’s operations this quarter and for the workforce that made these achievements possible,” the chairman added.

According to Schmitt, business prospects for aluminium remain healthy with automotive and construction sectors driving demand in North America while in the Asian sector the Japanese rebuild programme and Chinese government spending in general were fueling demand.

Schmitt: staying competitive

Aluminium consumption across the globe was on the rise registering a 3.2 per cent growth when compared to the previous year, he said.

Thanks to large infrastructural projects, demand for aluminium in the Mena region and Europe is at a new high, said the company chief.

Schmitt also said Alba production grew by 1.7 per cent and sales remained stable thanks to ongoing operational excellence initiatives.

On the 2012 priorities, Al Kooheji said the major ones were the launch of bankable feasibility studies for the Line 6 expansion project before the year’s end and the long-term contract to secure gas availability and price beyond 2012 for the Line 6 expansion.

The company also has set a target for the Alba Star programme to achieve additional cash savings of $30 million this year, he added.

Alba produces more than 860,000 tonnes per year of aluminium.