DOHA: Qatar Aluminium Manufacturing Company (Qamco), a 50 percent shareholder in Qatalum, a successful producer of primary Aluminium and one of the largest aluminium smelters in the region, reported a net profit of QR13.3m for the four-month period ended 31 March, 2019. The financial results predominantly represent the share of net profit in Qamco’s joint venture, Qatalum. The earnings per share stood at QR0.02.
During the period, Qatalum operated under challenging market conditions, which affected the performance of the company, as metal market is volatile by nature. Firstly, there was a notable increase in the direct costs, mainly due to an increase in the cost of the raw materials, particularly Alumina prices. This has increased Qatalum’s operating costs, and decreased its operating margins substantially during December, 2018.
Secondly, consumption of aluminium in some industries were adversely affected due to stringent environmental restrictions. As a result, there was gradual decline in demand for aluminium during this period. Furthermore, the sanctions imposed by the United States on a major aluminium producer has resulted in increased aluminium supply in some major markets. Overall, the lower demand due to environmental restrictions, and sanctions have significantly affected the aluminium prices.
Nevertheless, from the beginning of 2019, Qatalum witnessed gradual improvement in operating costs due to lower raw material costs, as well as an improvement of Aluminum selling prices. Qatalum together with its strategic partner, Hydro, maintained its position to market and sell all of its products and compete with international suppliers.
On the other hand, Qamco has a strong asset position as of 31 March 2019, standing at QR5.7bn, with cash and bank balances amounted to QR191.9m.
With an objective of maximizing value to its shareholders, Qamco is working closely with its joint venture Qatalum in a number of areas of value improvements. This includes cost and supply chain optimization, revenue enhancements, efficiency improvements and capital allocation. These efforts ensure that Qatalum will continue to maintain its position as one of the world’s low cost Aluminium smelter. As approved by the Company’s AGAM held on 13 March 2019 to distribute interim dividends along with its Q1, 2019 disclosure, the Board of Directors has decided to distribute an interim dividend of QR0.20 per share, totaling to QR111.6m, a payout ratio of 110 percent, representing 2.0 percent of the share nominal value for the six-month period ended 31 December 2018.
During the six-month period, the share of profits accrued to the founding shareholder (for five months) and to Qamco for one month is QR101m. Qamco received QR189.3m dividend relating to that period from Qatalum. The decision to pay a total dividend of QR111.6m is in line with the Company’s IPO Prospectus and the founder’s (Qatar Petroleum) economic rights waiver to Qamco’s shareholders for the period. The dividend will be paid on 5th May 2019.
