investorrelations presentation 2017 · disclaimer 2 this document has been prepared and issued by...

Aluminium

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INVESTOR RELATIONSPRESENTATION

2017

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

CONTENTS

01IndustryHighlights

02ALBAHighlights

032017Results

04IndustryPerspectivesin 2018

052018ALBA Priorities

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Aluminium

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01INDUSTRY HIGHLIGHTS1

1Industry Highlights are based on CRU Analysis

Industry Highlights – 2017

World consumption at 63.6 million metric tonnes (mt) and up by 6% YoY

Asian demand up by 7% YoY led by consumption in China (+8% YoY)

MENA demand remains strong (+4 % YoY) driven by major infrastructure spending in Saudi Arabia (+12% YoY)

Europe consumption rose by 3% YoY driven by strong growth in transport (auto body sheet), building and construction sectors

Demand in North America continues with the same momentum (+2% YoY) driven by the automobile production

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Global Physical Demand Remains Strong

5


World production up by 8% YoY (63.5 million mt)

Asia Production up by 12% YoY led by Chinese output (+13% YoY) despite winter closures and partially offset by new smelters’ restarts

North America & Europe production down by 2% YoY and 1% YoY respectively

World market in deficit with China (-43 Kt) and in deficit w/o China (-1.9 million mt )

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Global Production Evolution

6


LME inventories at 1.1 million mt in December (down by 50% YoY)

Q4 2017 cash-average was $2,101/t with LME ranging between $1,991/t on December 11 and $2,246/t on December 28

Physical premiums prices almost flat ($/t)

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LME & Premiums

7

Major Japanese Ports (MJP) US Midwest DDP Rotterdam

0

100

200

Q42016

Q12017

Q22017

Q32017

Q42017

132 145 144 143 155

0

100

200

Q42016

Q12017

Q22017

Q32017

Q42017

166211 203

172194

0

75

150

Q42016

Q12017

Q22017

Q32017

Q42017

69100

11790 94

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02ALBA HIGHLIGHTS

Continuous improvement on Safety performance with the launch of ‘Safety in All Seasons’ Campaign

Sales volume up by 0.4% YoY to reach 978,195 mt while Production topped 981,016 mt (+1% YoY)

2017 Value-Added Sales increased to 57% versus 56% in 2016

Line 6 Expansion Project milestones:

- Line 6 Smelter [5 million-hours w/o LTIs; overall progress: 40%]

- Power Expansion [3 million-hours w/o LTIs; overall progress of PS 5 at 47%& PDS at 65% ]

Alba signs MoU with GE for 4th GT block in Power Station 5

Alba and Bechtel sign MoU to explore further opportunities

Operational Highlights & Achievements

9

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Alba Highlights – 2017

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Safety in Focus -- Towards Safety Tomorrowland

10

Alba Major Highlights - 2017

2

6

10

2013 2014 2015 2016 2017

8

56

3

6

40

70

100

130

2013 2014 2015 2016 2017

119

5769 64

57

Lost Time Injury (LTI) Trend Total Recordable Injuries


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Sales Breakdown by Geographic Footprint Expanding in US and European Markets

11

Asia17%

Bahrain45%

Europe17%

Americas11%

MENA 10%

Bahrain41%

MENA12%

Asia12%

Europe23%

Americas12%

20172016

Alba Highlights – Q4 & FY 2017

Adjusted EBITDA up driven by higher LME prices and savings of Titan -Phase II

Q4: US$ 111 million up by 30% YoY

FY: US$ 438 million up by 34% YoY

Adjusted Net Income up driven by higher EBITDA levels

Q4: US$ 58 million up by 60% YoY

FY: US$247 million up by 91% YoY

Free-Cash Flow 1 unfavourable due to higher inventory level

Q4: US$ 19 million down by 65% YoY

FY: US$ 106 million down by 48% YoY

Alba Board recommends to distribute dividend of US$ 97.9 million to be paid in March 2018

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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 II: Streamline Cash-Cost by US$ 100/mtFull-Year 2017: Normalised Savings of US$ 79*/mt

2017Achieved

2017Target

79*

100

Project Titan - US$ per MT

* Taking into account the benefits of insurance claim

13


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Alba Share Price (ALBH) Appreciates by 92% YoY

320

268

384

362

432

412

490

500

505

500

555

615 615

100

200

300

400

500

600

700

Fils

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

14

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15

2016 2017

2,621 2,700

498664

3,1193,364

Total Head Count External Internal

2016 2017

544 561

56%57%

2016 2017

4856

2016 2017

86105


Operational Excellence

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

Account Receivable Days Inventory Days Trend

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16

Cash, Net Debt & Net Debt to EBITDA

-100

300

700

1100

FY 2014 FY 2015 FY 2016 FY 2017

184

-71 -39

1,058

179

309177

206

0.4-0.22

-0.12

2.42

Net Debt Cash Net Debt to EBITDA


Net Debt to EBITDA Ratio

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032017 RESULTS

2017 ResultsAluminium Prices Rally-up: Chinese Winter-Closures & Lower Inventories Outside China

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Favourable LME prices and Higher Volume sales

18

500

900

1,300

1,700

2,100

Metal Sales2016

LME Product Mix Pricing Power Volume Metal Sales2017

1,726

2,095

364

2 85

2017 vs. 2016 - Metal Sales Bridge (US$M)

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19

2017 vs. 2016 - Sales by Product Line Bridge (MT’000)

Premium Above LME Trend US$ Per MT

700

850

1000

Sales2016

ValueAdded

LiquidMatel

Commodity Sales2017

974 978

16 12 0

100

150

200

2016 2017

188 185

Favourable Sales Volume & Sustained Up-Charges


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20

2017 vs. 2016 - Direct Cost Bridge (US$M)

300

1,100

1,900

Direct Cost2016

RM Price RMConsumption

EnergyConsumption

AluminaSales Cost

InventoryChange

PlantSpending

Direct Cost2017

1,442

1,807

157

22

13 30111

102


Cost Analysis 2017 vs. 2016

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Adjusted EBITDA Bridge Gap Analysis: 2017 vs. 2016 Adjusted EBITDA Margin at 19.1%

21

2017 vs. 2016 - EBITDA Bridge (US$M)

0

450

900

EBITDA2016

(Adjusted)

Metal Sales Other Sales Direct Cost SellingExpenses

EBITDA2017

(Adjusted)

326438

EBITDA 18.1%

369

121

EBITDA 19.1%

364

14


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22

Free Cash-Flow (US$M)

-900

-600

-300

0

300

600

CashBalance

2016

CFfrom

Operations

WCChanges

CAPEXSpent

Line 6CAPEX

Net DebtService

Paymentto

Shareholders

CashBalance

2017

177 206

437

1,121

79

222

109

1,119

0

70

140

210

2016 2017

204

106

Operating & Investing Cash Flow excluding LINE 6 Capex

Cash Flow Bridge - 2016 to 2017 Maintain Cash-Flow Trend Despite Spending

2017 to 2016 Cash-Flow Bridge (US$M)


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23

18%

20%

14%

18%

22%

2016 2017

Percentage


Working Capital Trend as Percentage of Sales

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24

Financial Summary Q4 2017 Q4 2016 FY 2017 FY 2016

Average Cash LME (US$/MT) 2,101 1,710 1,968 1,604

Sales (US$M) 684 483 2,293 1,803

EBITDA (US$M) 110 85 437 326

EBITDA% 16.2% 17.6% 19.1% 18.1%

EBITDA (Excl. One-Off Costs) (US$M) 111 85 438 327

EBITDA% (Excl. One-Off Costs) 16.2% 17.6% 19.1% 18.1%

Net Income/ (Loss) (US$M) 62 37 246 129


Strong Management Performance Coupled With Higher LME Prices

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04INDUSTRY PERSPECTIVES IN 2018

Industry Perspectives in 2018

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Auto Demand - a Force Multiplier behind Aluminium Demand Growth

26

Key factors to be observed:

LME price is set to fluctuate on the back on US Section 232 and Chinese supply reforms & surging inventories in China

North America demand on firm footing led by the construction and auto production

LME price to range between US$ 2,100/t – US $2,200/t

Industry Perspectives in 2018

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Alumina prices expected to slightly soften post price-hike in 2017

Green Coke prices are set to increase due to shortages and stricter environmental regulations

Liquid Pitch and Aluminium Fluoride prices to remain at higher-range due to environmental regulations in China

Raw Materials Price Trends

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052018 ALBA PRIORITIES

2018 Alba Priorities

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29

Continuous focus on Safety with new ‘Safety Selfie’ initiative

Deliver on Project Titan - Phase III (2018: 1,000,000 mt & US$ 60/t)

Leverage strong physical demand on Value-Added Sales

Line 6 Expansion Project on schedule:

Finalize ECA Financing - second tranche by Q1 2018

Award the remaining packages

Preparation for Future Growth with the Rise of Line 6

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06APPENDIX


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Sales Analysis 4Q17 vs. 4Q16 Favourable LME Prices Coupled With Higher Sales Volume

31

250

450

650

Metal Sales4Q16

LME Product Mix Pricing Power Volume Metal Sales4Q17

473

636

123

339

2

4Q17 vs. 4Q16 - Metal Sales Bridge (US$M)

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32

100

200

300

256278

3 415

4Q17 vs. 4Q16 - Sales by Product Line Bridge (MT’000)

Premium Above LME Trend US$ Per MT

100

200

4Q16 4Q17

175 178

Sales 4Q16

ValueAdded

Sales 4Q17

LiquidMetal

Commodity


Favourable Sales Volume & Sustained Up-Charges

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33

100

300

500

700

Direct Cost4Q16

RM Price RMConsumption

EnergyConsumption

AluminaSales Cost

InventoryChange

PlantSpending

Direct Cost4Q17

388

557

65

10 833

494

4Q17 vs. 4Q16 - Direct Cost Bridge (US$M)


Cost Analysis 4Q17 vs. 4Q16

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Adjusted EBITDA Bridge Adjusted EBITDA Margin at 16.2%

34

0

150

300

EBITDA 4Q16(Adjusted)

Metal Sales Other Sales Direct Cost SellingExpenses

EBITDA 4Q17(Adjusted)

85110

163

38

169

7EBITDA 17.6%

EBITDA 16.2%

4Q17 vs. 4Q16 - EBITDA Bridge (US$M)


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Cash Flow Bridge - 3Q16 to 4Q16 Maintain Cash-Flow Trend Despite Spending

35

3Q17 to 4Q17 Cash-Flow Bridge (US$M) Free Cash-Flow (US$M)

0

30

60

4Q 2016 4Q 2017

55

19

Operating & Investing Cash Flow

(Excluding L6 CAPEX)


-240

-120

0

120

240

CashBalance

3Q17

CFfrom

Operations

WCChanges

CAPEXSpent

Line 6Capex

Net DebtService

CashBalance

4Q17

152

382 416

206

11052

39

36

Alba4World alba4world user/Alba4World photos/alba4world

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