INVESTOR RELATIONS PRESENTATION - Aluminium Bahrain Presenta… · Forward-looking statements speak...

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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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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


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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


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8

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


23%

26%

22%

21%20%

10%

16%

22%

28%

Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019

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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


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


H1: (US$35) million down by 123% YoY

Free-Cash Flow1 driven by higher maintenance CAPEX and unfavourable working capital


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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13

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]


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03Q2 2019 RESULTS

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15

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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16

Higher Sales’ Volume Underpinned by Higher Value-Added & Commodity Sales’ Volume


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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17

Q2 2019 vs. Q2 2018 - Direct Cost Bridge (US$M)

Cost Analysis Q2 2019 vs. Q2 2018


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%

18

Q2 2019 vs. Q2 2018 - EBITDA Bridge (US$M)


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)


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


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04INDUSTRY PERSPECTIVES IN 2019

Industry Perspectives in 2019

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Demand to Grow Despite Economic Uncertainty

22

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

23

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

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Safety Focus & Line 6 Ramp-up to Full Production

25

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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27

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


14

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H1 2019 vs. H1 2018 - Direct Cost Bridge (US$M)

Cost Analysis H1 2019 vs. H1 2018


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%


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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)


-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

Alba4World alba4world user/Alba4World photos/alba4world

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For More Information, Contact Us on:

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