investorrelations presentation 2018 · investorrelations presentation 2018. disclaimer 2 this...

Aluminium

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INVESTOR RELATIONSPRESENTATION

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.

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3

CONTENTS

01IndustryHighlights

02ALBAHighlights

032018Results

04IndustryPerspectivesin 2019

052019ALBA Priorities

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Aluminium

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01INDUSTRY HIGHLIGHTS1

1Industry Highlights are based on CRU Analysis

Industry Highlights – 2018

World consumption at ~66 million Metric Tonnes (MT) (+3% YoY )

MENA demand hit double-digit growth for another year in a row (+13% YoY) backed by major infrastructure spending in Saudi Arabia (+28% YoY)

Demand in Asia up by 4% YoY led by slow consumption in China (+4% YoY)

Europe consumption rose by 3% YoY supported by sound demand in the construction and automobile sectors

Demand in North America up by 2% YoY driven by the auto and aerospace sectors

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Global Physical Demand Continue to Grow

5


World production up by 1% YoY (~64 million MT) World market in deficit with China (-1.8 million MT ) and in deficit w/o China (-2.2 million MT)

Higher alumina and power prices drove Chinese smelters’ closure translating into flat production growth

Production in North America down by 4% YoY due to production cut in ABI smelter in Canada

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Global Production Almost Flat

6


LME inventories at ~1.3 million MT in December (+16% YoY)

Q4 2018 Cash-average was $1,971/t with LME ranging between $1,869/t on December 31 and $2,243/t on October 4

Physical premiums prices continue to soften ($/t) as USA lifted the previous imposed sanctions on UC Rusal

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LME & Premiums

7

Major Japanese Ports (MJP) US Midwest DDP Rotterdam

0

225

Q42017

Q12018

Q22018

Q32018

Q42018

156 168202

158134

0

250

500

Q42017

Q12018

Q22018

Q32018

Q42018

208305

480 455 485

0

75

150

Q42017

Q12018

Q22018

Q32018

Q42018

95 103129 132

103


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Alumina Prices Closed Higher in 2018 Averaging at US$473/t

8

100

200

300

400

500

600

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

339295

337

445

384

526 540

441

CRU Alumina Price Index

2017 AVG: US$354/t 2018 AVG: US$473/t

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02ALBA HIGHLIGHTS

Alba improved its Safety performance by recording a 50% drop in Lost Time Injuries YoY. Alba launched ‘Think Orange, Think Line 6 Safe Start-up’ Campaign to coincide with the commissioning of Line 6

Amongst 1 Million-Club metric tonnes (MT) smelter, Alba’s Production topped 1,011,101 MT (+3% YoY) while Sales volume reached 1,012,548 MT (+3.5% YoY)

Value-Added Sales at 60% in 2018 [up from 57% in 2017]

Line 6 Expansion Project milestones:

- Alba Power Expansion Project achieves First Fire Milestone

- Alba commissions Line 6 ahead of schedule

- Alba starts Casthouse 4 - the biggest furnace in its history

- Line 6 Smelter [overall progress > 80%]

- Power Expansion Project [PS 5 & PDS overall progress: 83% & 96%]

Operational Highlights & Achievements

10

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Alba Highlights – 2018

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Safety in Focus: 50% Reduction in LTIs and Focus towards Zero Injuries

11

Alba Major Highlights - 2018

2

5

8

2014 2015 2016 2017 2018

56

3

6

320

50

80

2014 2015 2016 2017 2018

57

6964

57

32

Lost Time Injury (LTI) Trend Total Recordable Injuries


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Sales Breakdown by Geographic Footprint Diversified Customer-Base With Emphasis on US and MENA

12

Bahrain41%

MENA12%

Asia12%

Europe23%

Americas12%

20182017

Bahrain34%

MENA17%

Asia14%

Europe20%

Americas15%

Alba Highlights – Q4 & FY 2018

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Financial Key Performance Indicators

13

1 Free-Cash Flow excluding Line 6 CAPEX spending

EBITDA impacted by higher Alumina prices

Q4: US$ 7 million down by 94% YoY

FY: US$ 330 million down by 24% YoY

Net Income (Loss) down due to higher Alumina prices

Q4: US$ (47) million down by 176% YoY

FY: US$ 159 million down by 35% YoY

Free-Cash Flow1 unfavourable due to Line 6 inventory ramp-up in Q4 & favourable thanks to good Cash-Flow management

Q4: US$ (70) million down by 489% YoY

FY: US$ 415 million up by 295% YoY


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14

2018 Target

101

60

Project Titan III - US$ per MT

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

Project Titan - Phase III: Improve Cash-Cost Structure by US$ 60/MT Full-Year 2018: Achieved Savings of US$101/MT


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Alba Share Price (ALBH) Trend

610 605

550

560

610

630

635 600

595 590

600

450

500

550

600

650

700

Fils

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

15

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16

2017 2018

2,7003,186

664

7483,364

3,934

Total Head Count External Internal

2017 2018

560609

57%

60%

2017 2018

5647

2017 2018

105110


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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17

Cash, Net Debt & Net Debt to EBITDA

-100

400

900

1400

1900

2400

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

184-71 -39

1,059

2,012

179309 177

206

276

0.4 -0.22-0.12

2.42

6.10

Net Debt Cash Net Debt to EBITDA


Net Debt to EBITDA Ratio

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032018 RESULTS

2018 Full-Year ResultsUC Rusal Sanction & Trade-Tensions Behind Increased Volatility in LME Prices

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19

800

1,200

1,600

2,000

2,400

Metal Sales2017

LME Product Mix PricingPower

Volume Metal Sales2018

2,095

2,373

1548 42

74

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

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

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20

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

Premium Above LME Trend US$ Per MT

850

950

1050

Sales2017

ValueAdded

LiquidMatel

Commodity Sales2018

9781,013

48

8 5

100

150

200

250

2017 2018

185

234


Higher Sales Volume Denominated by Favourable Shift in Product Mix

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21

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

1,400

1,800

2,200

Direct Cost2017

RMPrice

RMConsumption

EnergyPrice

OtherRM

AluminaSales Cost

InventoryChange

PlantSpending

Direct Cost2018

1,807

2,034

339

5231

6

37

12143

Cost Analysis 2018 vs. 2017: Higher Alumina Prices


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Favourable Management Performance Offset by Higher Alumina Prices

22

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

0

400

800

EBITDA2017

Metal Sales Other Sales Direct Cost SellingExpenses

EBITDA2018

437

330

EBITDA 19.1%

278

EBITDA 13.6%

140

228

17


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23

Free Cash-Flow (US$M)

-800

-400

0

400

800

CashBalance

2017

CFfrom

Operations

WCChanges

CAPEXSpent

Line 6CAPEX

LoanDrawdown

Paymentto

Shareholders

CashBalance

2018

206 276

328

221

1,014

98

134

1,261

0

250

500

2017 2018

105

415

Operating & Investing Cash Flow excluding LINE 6 Capex

Cash Flow Bridge: 2017 to 2018 Maintain Cash-Flow Trend and Good Cash Position

2017 to 2018 Cash-Flow Bridge (US$M)


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24

2018 Highlight: Increased Volatility in LME Price & Higher Alumina Price


Financial Summary Q4 2018 Q4 2017 FY 2018 FY 2017

Average Cash LME (US$/MT) 1,971 2,101 2,111 1,968

Average Alumina Price (US$/MT) 441 445 473 354

Total Sales (US$M) 559 684 2,430 2,293

EBITDA (US$M) 7 110 330 437

EBITDA% 1.3% 16.2% 13.6% 19.1%

Net Income/ (Loss) (US$M) (47) 62 159 246

Net Income% (6.7)% 8.5% 6.2% 10.8%

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04INDUSTRY PERSPECTIVES IN 2019

Industry Perspectives in 2019

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Physical Demand to Remain Healthy

26

Key factors to be observed:

LME price is set to fluctuate on the back of UC Rusal sanction’s relief, stronger US$ and shaky global economic outlook

Demand in North America on firm footing led by automotive and aerospace sectors

China unveils stimulus to boost aluminium demand

Physical premiums to soften with the lifting of imposed sanctions on UC Rusal

LME price to range between US$ 1,900/t – US $2,000/t

Industry Perspectives in 2019

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Alumina prices expected to soften on the back of Alunorte refinery full restart in 2019 & EGA Al Taweelah ramp-up

Green Petroleum Coke prices to ease in 2019 due to balance in market fundamentals across the world

Liquid Pitch & Aluminium Fluoride prices to remain at the higher range on the back of limited supply

Raw Materials Price Trends

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052019 ALBA PRIORITIES

2019 Alba Priorities

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29

Continuous focus on Safety with new ‘Safety Gateway’ initiative

Deliver on Project Titan - Phase IV: reduce cash-cost of US$ 100 million by the end of 2020 [2019: US$ 40 million & 2020: US$ 60 million]

Leverage on Value-Added Sales

Focus on Future Upstream Opportunities

Ramp-up Line 6 safely and on time

Alba On Set To Be World’s Largest Smelter With Line 6

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06APPENDIX

Sales Bridge Analysis: Q4 2018 vs. Q4 2017 Unfavourable LME Prices Coupled With Lower Sales Volume

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31

250

450

650

Metal Sales4Q17

LME Product Mix Pricing Power Volume Metal Sales4Q18

636

559

5 148

35

4Q18 vs. 4Q17 - Metal Sales Bridge (US$M)

Q4 2018 ResultsAluminum Industry Impacted by Higher Alumina Prices and Lower LME Prices

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32

120

220

320

278262

15 1516

4Q18 vs. 4Q17 - Sales by Product Line Bridge (MT’000)

Premium Above LME Trend US$ Per MT

120

220

4Q17 4Q18

178

201

Sales 4Q17

ValueAdded

Sales 4Q18

LiquidMetal

Commodity

Lower Sales Volume & Higher Premiums


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33

300

500

700

Direct Cost4Q17

RMPrice

RMConsumption

EnergyPrice

OtherRM

AluminaSales Cost

InventoryChange

PlantSpending

Direct Cost4Q18

557 541

73

4226

92

4 8

21

4Q18 vs. 4Q17 - Direct Cost Bridge (US$M)

Cost Analysis Q4 2018 vs. Q4 2017: Higher Alumina Prices


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Management Performance Double-Hit With Higher Alumina Prices & Lower LME Prices

34

0

75

150

EBITDA4Q17

MetalSales

SellingExpenses

DirectCost

OtherSales

EBITDA4Q18

110

7

77

516

47

EBITDA 16.2%

EBITDA 1.3%

4Q18 vs. 4Q17 - EBITDA Bridge (US$M)


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Cash Flow Bridge – Q3 2018 to Q4 2018 Maintain Cash-Flow Trend and Good Cash Position

35

3Q18 to 4Q18 Cash-Flow Bridge (US$M) Free Cash-Flow (US$M)

-70

-35

0

35

4Q 2017 4Q 2018

18

-70

Operating & Investing Cash Flow(Excluding L6 CAPEX)

-120

0

120

240

360

CashBalance

3Q18

CFfrom

Operations

WCChanges

CAPEXSpent

Line 6Capex

LoanDrawdown

Paymentto

Shareholders

CashBalance

4Q18

156

168

358 2767 9

68

0


36

Alba4World alba4world user/Alba4World photos/alba4world

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For More Information, Contact us on:

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investorrelations presentation 2018 · investorrelations presentation 2018. disclaimer 2 this...

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