investor relations presentation presenta… · q3 2018 cash-average was us$ 2,056/t with lme...

Aluminium

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INVESTOR RELATIONSPRESENTATION

Q3 2018

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

for the world

3

01IndustryHighlights

CONTENTS

02ALBAHighlights

03Q3 2018Results

04IndustryPerspectivesin 2018

052018ALBA Priorities

Aluminium

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Aluminium

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01INDUSTRY HIGHLIGHTS

1 Industry Highlights are based on CRU analysis

Industry Highlights – Q3 2018

World consumption up by 4% YoY

MENA demand hit double-digit growth (+10% YoY) driven by major infrastructure spending in Saudi Arabia (+25% YoY)

Demand in Asia up by 5% YoY led by Chinese consumption

Europe consumption up by 3% YoY thanks to sound demand across Building & Construction (B&C) and transport sectors

Demand in North America rose by 2% YoY driven by auto production (heavy-duty trucks) & construction sector

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Global Physical Demand Remain Healthy

5


World production rose by 2% YoY

Asian supply up by 3% YoY [Chinese supply rose by 2% YoY]

Production in North America fell by 4% YoY due to the late ramp-up of New Madrid smelter

World market in deficit with China (-333 Kt) & (-445 Kt) without China

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Global Production Grow at Slow Pace

6


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LME & Premiums

7

Q3 2018 cash-average was US$ 2,056/t with LME ranging between US$ 1,981/t on September 19 and US$ 2,165/t on July 3

LME inventories at 1.1 million metric tonnes in September

Physical premium prices ($/t) soften

Major Japanese Ports (MJP) US Midwest DDP Rotterdam

0

225

Q32017

Q42017

Q12018

Q22018

Q32018

143 156 168202

158

0

250

500

Q32017

Q42017

Q12018

Q22018

Q32018

172 208305

480 455

0

75

150

Q32017

Q42017

Q12018

Q22018

Q32018

11995 103

129 132

Major Japanese Ports (MJP) is based on CIF


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Alumina Prices Head Skyward Thanks to Supply Shortage

8

100

200

300

400

500

600

Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018

221252 233

308339

295337

445

384

526 540

CRU Alumina Price Index

CRU Alumina Price Index

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02ALBA HIGHLIGHTS

Alba Highlights – Q3 2018

Launch of Summer Safety Campaign ‘Safety Selfie’

Total Sales and Production volume touched 248,970 metric tonnes (MT) and 251,472 MT respectively

Alba Value-Added Sales averaged 60% of total shipments in Q3 2018

Line 6 Expansion Project in progress:

- Line 6 Smelter [overall progress > 70%]

- Power Expansion Project [PS 5 & PDS overall progress: 72% & 92%]

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Operational Highlights & Milestones

10

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Continued Focus on Safety

11


0

4

8

2014 2015 2016 2017 YTDSept. 2018

56

3

6

210

70

2014 2015 2016 2017 YTDSep. 2018

57

6964

57

26

Lost Time Injury (LTI) Trend Total Injuries Trend

Alba Highlights – Q3 & YTD 2018

EBITDA hit by higher Alumina cost

Q3: US$ 80 million down by 32% YoY

YTD: US$ 323 million down by 1% YoY

Net Income driven by Q3 & YTD EBITDA levels

Q3: US$ 38 million down by 45% YoY

YTD: US$ 206 million up by 12% YoY

Free-Cash Flow1 up thanks to sound working capital management

Q3: US$ 103 million up by 11% YoY

YTD: US$ 486 million up by 459% YoY

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Financial Key Performance Indicators

12 1 Free Cash Flow excluding Line 6 CAPEX spending

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Project Titan - Phase III: Improve Cash Cost Structure by US$ 60/MT Q3 2018: Achieved Savings of US$ 83/MT

13

Q3 2018 Target

8360

Project Titan - US$ per MT

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


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03Q3 2018 RESULTS

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15

250

350

450

550

650

Metal SalesQ3 2017

LME Product Mix Pricing Power Volume Metal SalesQ3 2018

531

595

411 19 3

Q3 2018 vs. Q3 2017 - Metal Sales Bridge (US$M)

Sales Bridge Analysis Q3 2018 vs. Q3 2017 Higher Metal Sales Thanks to Higher LME Prices and Premiums

Q3 2018 ResultsAluminium Industry: Rising Alumina Prices Squeeze Industry Profitability

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16

100

150

200

250

248 249

2 23

Q3 2018 vs. Q3 2017 Sales by Product-Line Bridge (MT’000)

Premium Above LME Trend US$ Per MT

80

180

280

184

263

Sales Q3 2017

ValueAdded

Sales Q3 2018

LiquidMetal

CommodityQ3 2017 Q3 2018

Higher Sales Volume Denominated by Favourable Shift in Product Mix


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17

Q3 2018 vs. Q3 2017 - Direct Cost Bridge (US$M)

Cost Analysis Q3 2018 vs. Q3 2017: Higher Alumina Prices

200

375

550

Direct CostQ3 2017

RMPrice

RMConsumption

EnergyPrice

OtherRM

AluminaSales Cost

InventoryAbsorption

PlantSpending

Direct CostQ3 2018

484 511

7

59

27101

10 8

1


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Favourable Management Performance Partially Offset by Higher Alumina Prices - EBITDA% 12.8%

18

0

100

200

MetalSales

OtherSales

DirectCost

SellingExpenses

117

80

64 61

27

13

EBITDA 18.7%

EBITDA 12.8%

Q3 2018 vs. Q3 2017 - EBITDA Bridge (US$M)

EBITDAQ3 2017

EBITDAQ3 2018


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Cash Flow Bridge - Q2 2018 to Q3 2018: Maintain Good Cash Position

19

Q2 2018 to Q3 2018 Cash Flow Bridge (US$M) Free Cash Flow (US$M)

Operating & Investing Cash Flow

(Excluding L6 CAPEX)

-150

0

150

300

CashBalance

2Q18

CFfrom

Operations

WCChanges

CAPEXSpent

Line 6CAPEX

LoanDrawdown

Paymentto

Shareholders

CashBalance

3Q18

120156

80

61

271

38

3380

0

60

120

Q3 2017 Q3 2018

93103


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20

Solid Management Performance Partially Offset With Higher Alumina Prices

Financial Summary Q3 2018 Q3 2017 YTD 2018 YTD 2017

Average Cash LME (US$/MT) 2,056 2,011 2,158 1,924

Average Alumina Price (US$/MT) 540 337 483 324

Total Sales (US$M) 624 626 1,861 1,609

EBITDA (US$M) 80 117 323 327

EBITDA% 12.8% 18.7% 17.3% 20.3%

Net Income/ (Loss) (US$M) 38 69 206 184

Net Income% 6.0% 11.0% 11.0% 11.4%


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04INDUSTRY PERSPECTIVES IN 2018

Industry Perspectives in 2018

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Physical Demand to Remain Healthy

22

Key factors to be observed:

LME volatility to continue on the back of trade-war tension, stronger US$ and softening on Rusal sanction

Metal consumption to slow-down in China while Europe and North America will have healthy growth

Global market to face supply shortages

Physical premiums are set to soften

Uncertainty over Alumina supply and prices to continue until Alunorte is back to full production

LME price expected to range between US$1,950/t - US$ 2,050/t

Industry Perspectives in 2018

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Raw Materials Price Trends

23

Spot alumina prices to remain high

Green Petroleum Coke (GPC) price to inch upward led by the Chinese environmental regulations and supply constraints in the short-term

Liquid pitch & Aluminium Fluoride prices to remain at the higher range for the rest of 2018

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052018 ALBA PRIORITIES

2018 Alba Priorities

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Sustainable Improvement & Preparation for Future growth

25

Continued Focus on Safety initiatives ‘Think ORANGE, Think Line 6 SAFE Start-up’

Exceed Projected Target Savings of Titan - Phase III [2018: 1 Million MT & US$ 60/t]

Leverage Strong Demand on Value-Added Sales

Focus on Future Upstream Opportunities

Prepare for the Safe Start-up of Line 6

- Close Final Part of 2nd ECA-Covered Facility Tranche

- Start Commissioning PS 5 for the Start-up of Line 6

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06APPENDIX

Aluminium

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27

LMEMetal SalesYTD 2017

Pricing Power Metal Sales YTD 2018

Volume

800

1,300

1,800

1,460

1,814

208

3 40

103

YTD 2018 vs. YTD 2017 - Metal Sales Bridge (US$M)

Product Mix

Sales Bridge Analysis YTD 2018 vs. YTD 2017 Higher Metal Sales Thanks to Higher LME Prices and Premiums

YTD 2018 ResultsAluminium Industry: Rising Alumina Prices Squeeze Industry Profitability

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28

YTD 2018 vs. YTD 2017 Sales by Product-Line Bridge (MT’000)

Premium Above LME Trend US$ Per MT

Sales YTD 2017

ValueAdded

Sales YTD 2018

LiquidMetal

Commodity YTD 2017 YTD 2018150

500

850

701750

33 6 10

0

100

200

188 246

Higher Sales Volume Denominated by Favourable Shift in Product Mix


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29

YTD 2018 vs. YTD 2017 - Direct Cost Bridge (US$M)

Cost Analysis YTD 2018 vs. YTD 2017: Higher Alumina Prices

500

900

1,300

1,700

Direct CostYTD 2017

RMPrice

RMConsumption

EnergyPrice

OtherRM

AluminaSales Cost

InventoryAbsorption

PlantSpending

Direct CostYTD 2018

1,250

1,494

7915 17

249

4624 36


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Favourable Management Performance Partially Offset by Higher Alumina Prices - EBITDA% 17.3%

30

YTD 2018 vs. YTD 2017 - EBITDA Bridge (US$M)

0

350

700

MetalSales

OtherSales

DirectCost

SellingExpenses

327 323

354

92

244

22EBITDA 20.3% EBITDA 17.3%

EBITDAYTD 2017

EBITDAYTD 2018


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Cash Flow Bridge - FY 2017 to Q3 2018: Sound Free Cash-Flow

31

FY 2017 to YTD 2018 Cash Flow Bridge (US$M) Free Cash Flow (US$M)

-350

0

350

700

CashBalance

2017

CFfrom

Operations

WCChanges

CAPEXSpent

Line 6CAPEX

LoanDrawdown

Paymentto

Shareholders

CashBalance

3Q18

206 156

322

230

656

66

1,094

98

0

200

400

YTD2017

YTD2018

87

486

Operating & Investing Cash Flow

(Excluding L6 CAPEX)


32

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For more information, contact us on:

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Manama (ALBH)

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investor relations presentation presenta… · q3 2018 cash-average was us$ 2,056/t with lme...

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